what does this code mean?what part is bad? Thanks

change the o2 sensors and/or cat converter, see if the cat rattlers inside.

There is a o2 sensor in/near the converter. Is there another?

Yes, im guessing you have the 4.0, but there is one before the cat, up on the vertical portion of the exhaust header. Just get under the exhaust-side of the engine and look up, it is plugged in about halfway up. Easy to get to.

Found it!. Thanks! Turns out that is not the one causing the problem. I guess I'll move along to the other one and hope that allows me to reset the check engine light.

BTW - I didn't need the special slotted socket to remove or install the OS Sensors just an open end 22mm wrench.

I am having the same problem with my 99 Grand Cherokee, i am going to have the O2 sensor changed or do i have to follow a different procedure, i'll get back to you guys when i'm done.

My guess is the o2 sensors and placement have not changed much from 96-99. You can do this yourself and save some $'s. I got my sensors from www.oxygensensors.com for around $60 (including shipping). The same sensors were $90 at local discount parts stores (Advance Auto/Autozone). I bought a OBDII code reader off ebay for around $50 and when I put that last sensor in I'll rescan and attempt to reset the light. Your jeep is a lillte young for the sensors to go bad have you had the converter checked? You can certainly start with the sensors but you may also need to replace the catalytic converter.

I am getting it looked at Monday Morning, the problem might be the Convertor itself, any ideas on hwo much it would cost?

Around $150 (muffler shop, non dealership price) for the converter. If the shop installs O2 sensors probably another $200+.