Toyota Camry engine blocking system

The engine blocking system is designed to prevent vehicle theft. When you insert the key into the ignition, the transponder chip in the head of the key transmits an electronic code to the vehicle. The engine will only start if the electronic code in the chip matches the registered vehicle identification code.

Engine immobilizer indicator lamp

The system turns on automatically when the key is removed from the ignition. The indicator lamp starts flashing to indicate that the system is on.

If one of the following indicator conditions occurs, contact your Toyota dealer:

• The indicator lamp remains on;
• The indicator lamp does not flash when the key is removed from the ignition; 
• The indicator lamp flashes irregularly.

By inserting the registered key into the ignition lock, you automatically turn off the system, making it possible to start the engine. The indicator lamp will turn off.

In order for your Toyota dealer to make a new key with a built-in transponder chip, the dealer must have your key number and master key. However, there is a limit to the number of additional keys your Toyota dealer can make for you.

If you make your own duplicate key, you will not be able to unlock the system or start the engine.

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Source:  http://carmanz.com/toyota/camry-2001-2006/226952-tc200131.html