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There's a problem with the system.
The blinking light is sending you a trouble code or indicating one is stored. To read the code press the RECIRC/FR and AUTO buttons simultaneously while turning the ignition key to On (it might help to have another person turning the key or pressing the buttons). If all is well indicator lights will illuminate for one second then go off in sequence. If there's a problem, the codes appear on the temperature setting control (already blinking in your case.) The codes (11 through 43) indicate the problem. They can range from bad sensors (room temp, ambient temp, evaporator, water temp, solar etc) to broken or stuck damper positions or servo motors. It's also possible you're simply low on refrigerant.
In any case, you should roll by your Toyota dealer or qualified AC shop for diagnosis and repair.
Cheers
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