1996 Ford Explorer Overdrive

I've been driving my daughter's Explorer this week while my van is in the shop. Most of the driving has been around town and the vehicle has been fine. Today I drove it on the highway (60-65 miles per hour). It drove fine on the first leg of the trip (about 26 miles). On the way home I noticed a light flashing on the dash saying "O/D off" which I assume is overdrive. I pushed the button on the end of the gear selector arm that said "O/D off/on" and could see the difference in rpm's so I left it selected for the lowest rpm's (about 2500). Then when I got closer to home and dealing with trafic lights and stop signs I started getting a hard shift when slowing up and dropping from 2nd to 1st gear. Any idea what might be causing this? I remember having the problem when we first got the vehicle about 4 years ago and our mechanic took a quick look but couldn't repeat the problem. My daughter doesn't seem to experience it but she does very little highway driving. Thanks for your help!