When was the trans fluid and filter changed last?  What mileage?

When is the last time the fluid was changed? Is it at the proper level? What does the fluid look like, is it burned and gritty? If not, changing the fluid may help. (It's also possible it's a shift solenoid or some other non-fatal issue, but a transmission mechanic would need to determine that.)

A last resort to get some additional life out of it if the fluid is too contaminated to change or fresh fluid does not help would be to try some Lucas transmission additive. (That's just a bandaid to try getting a little more life out of a failing trans. It may or may not help.)

Scotty has recommended only factory rebuilt transmissions on modern cars due to their complexity.

https://www.youtube.com/watch?v=8RUcieMGriU

(original poster)

Took the '07 Lexus ES350 to the local Toyota shop this morning.  On my way there, I took a video of the car revving from 2k to 3k rpm while changing from 3rd gear to 4th, then emailed it to my service advisor upon arrival.  After waiting about 2.5 hours, I went to check on it's progress and they were ready to release it.

Shop notes say "Confirmed torque converter clutch flare. Performed memory reset. Better after reset, may need torque converter replaced." ($3017.77) Advisor said fluid level is correct.

Advisor also showed me a printout of an additive I could put in the transmission.  It's called Lubegard Instant Shudder Fixx

https://www.lubegard.com/products/isf/

At this point, I think I'll see if the ECM can learn my driving behavior since the memory was reset and hopefully the flare will go away or be reduced.  If that doesn't work, I'll buy the Lubegard and drive it awhile.  Given the car has 158K miles on it,  I'll probably drive it anyway if it keeps flaring- as long as it shifts to gear 5 & 6.

I wouldn't have anybody rebuild that 6- speed. A transmission shop near me did a questionable job of rebuilding the 4-speed in my truck. Only get a remanufactured one.

If the transmission was flushed twice as you mentioned, that's probably causing the problem. Metal filings and particulates get trapped in between gears, in valves, solenoids, passages, etc. And jams them up. The shop gave me the overdrive gears that where in my truck. They binded up from metal shavings and crud in them. I work at a plating company and soaked the assembly in a chemical bath. They spin again and are a garage decoration. You can't clean a tranny out with that stuff, though, it would destroy stuff. Flushing is the worst thing to do to a tranny, sadly. 

Good news. The shift flare is gone.  If someone else drove the car, they may detect a short pause when shifting from 3rd to 4th gear, but I consider it fixed.  I read a post by fellow member willrev about BG transmission service and found out the shop I used a few times performs this procedure.  I was already going to make an appointment with them for my dead alternator to be replaced, they said they could do the BG the same day. After I got the car back late afternoon Jan 26, I waited a few days to make sure the fix was real, I drove it cold this morning and the shift from 3 to 4 takes a fraction of the time it did the days and weeks before.

Here are the technician notes on my invoice:

BG Automatic Transmission Flush Service...$152.32

"Tech added BG transmission system cleaner and ran until trans was up to operating temp. Disconnected trans lines and connected to flush machine. Flushed system of old fluid and installed new fluid. after flush, technician re-connected lines and installed BG additive for further transmission protection. Checked trans temp to verify proper fluid level and test drove thoroughly."

Additional notes: BG transmission flush kit..$52.13

Automatic Transmission Fluid...$111.04

Glad I didn't have to spend $5k to replace the transmission.  However, I'm disappointed in the people that said I did. 

Hope this helps other 2007 Lexus ES350 owners in a similar situation.

Took it to the local Toyota dealer August 25, 2021 the mileage was 156,017.  The job sheet says "performed  Petra 5100B trasmission fluid flush."  When I checked the car in, I asked about doing just a drain & fill, the service advisor said they have record of it being serviced February 2, 2019 at 63,946.  I mentioned at least one other time fluid was changed and she said a flush shouldn't hurt it.

Looking through my past records, an independent shop changed transmission filter, drain and refilled September 6, 2019 at 88767 miles, the same shop said they did a flush April 13, 2020 with 133314 miles while it was in for a different problem.

I had the same thing on my 2008 Chevy Trailblazer where it would increase RPM's going from first to second gear but would never catch and it happened around 225,000 miles.  It ended up being that the transmission was actually missing or skipping second gear.  You will know if this is the case by your RPM's.  So If on the interstate going 75 you usually are around 2000 rpm well when my trailblazer had this problem it was around 3000 rpm's.  I ended up getting a mechanic to swap out the transmission for a used one.  It was around 800 dollars and its been fine ever since.  I don't thing changing the fluid will do you any good but im not a mechanic.  Good luck.

i thought Scotty said that the Lexus and Toyota will last approximately 500,000 miles......