This study explores the policies, problems, and prospects related to transgenders serving in the U.S. military. Simply defined, "transgender" refers to persons whose gender identity, behavior, or expression does not conform to their sex assigned at birth. Yet, as the present study shows, the terminology and associated issues are complicated and defy simple definitions. The U.S. military currently prohibits transgenders from joining or serving openly, as seen in policies and medical standards identified by the study. A number of other nations do not prohibit transgenders from serving in their military. The study focuses on the practices of two such nations, Australia and Canada. Also examined is the trend toward changing medical classifications of transgender, resulting from revised perspectives by the world's most authoritative sources. Notably, these sources have shifted away from classifying gender incongruence as a disorder or placing it in a mental health category. The study concludes that medical reasons for excluding transgenders from the U.S. military are inconsistent with prevailing views. Several areas for further research are recommended.