I've experienced bad mildew/musty odor from the AC. I purchased a new 2013 Highlander in 2013. I practice shutting off the AC while leaving the fan on a few minutes before my arrival, however the odor problem continued. I drove approximately 55 miles to a Toyota dealer for service, but they claimed they could not duplicate the problem and stated I can bring it back if it occurs again. I explained the odor occurs as I first start the AC, it's a strong musty mildew odor and over several minutes of use the odor declines but does come back the next day when I first start up the AC. I'm told the tech installed a deodorizer of some kind in the ventilation system some where, as suggested by Toyota. The odor did continue to occur but not as intense. Summer ended thus haven't used AC for sometime. I hope next summer the problem does not come back. I've owned several vehicles with AC but never experienced this with any previous vehicle. I can only hope Toyota tech will take the time to look at the evaporator coil for mildew growth next time, should this reoccur next summer. Instead of simply stating he doesn't smell an odor.

Update from Jan 12, 2015: In addition to previous comment written summer 2013. The odor from the AC returns following use of the AC. It is mildew fungus growth on the evaporator coil. The service department tried to clean it by drilling a hole in the plastic housing and spraying a treatment of some kind on the evaporator, but it continues to return following AC use. Again I continue to practice shutting off the ac but leaving the fan on high a few minutes before my arrival as an attempt to dry out the system. In my opinion, Toyota is using a rough surface evaporator coil which is trapping organic material (dirt) and moisture causing mildew fungus development and the strong stagnant odor. The warranty is about to run out and I know it will be back during the summer cooling season. In my opinion, Toyota should be honoring service of this problem beyond basic the warranty since the fact-of-the-matter is, they haven’t fixed the problem and only temporarily covered it up. It is and will remain an ongoing problem with this vehicle. I’ve owned several cars in my life with AC and the Toyota Highlander is the only vehicle I’ve had this AC mildew odor problem with. Shame on Toyota for not correcting the problem, leaving vehicle owners to deal with it following warranty period.

I purchased a new 2013 Toyota Highlander about 8 months ago (in the fall). Once Summer came and we started using the AC we quickly noticed a foul smelling moldy odor. I researched and read about turning off the AC 5 minutes before arriving at your destination and blowing only the vented air. This did help but did not eradicate the smell. My child cannot ride in this vehicle due to his asthma. I paid $40,000 for THIS! The service manager says ALL vehicles have this problem. REALLY?? I owned a Ford Windstar for 13 years and the AC still smells wonderful. My husband owns a Dodge minivan for 8 years--AC smells wonderful. My daughter purchased a 1995 Toyota 4 Runner 5years ago--AC smells wonderful. I could go on and on with friends and relatives. This is obviously a Toyota problem and needs fixed. Toyota is going to look at my AC unit tomorrow but I know there is going to be a battle ahead of me.