U.S. Secretary of Defense Ash Carter Thursday announced an end to the ban on openly transgender people serving in the military.
The policy takes effect immediately.
Carter said the new policy recognizes that there are already transgender troops.
"The Defense Department and the military need to avail ourselves of all talent possible in order to remain what we are now: the finest fighting force the world has ever known," he said.
Previously, servicemen and women could be kicked out if they came forward as transgender, and the new policy not only allows them to serve openly but will also offer medical services "deemed necessary" by their regular military health care providers.
That could involve hormonal therapy and possibly even gender reassignment surgery.
The issue of transgender service had been seen by some LGBT advocates as the final battle for equality in the military following the repeal of Don't Ask Don't Tell in 2010.
Former Air Force member JoAnna Michaels said that when Don't Ask Don't Tell ended, being transgendered was still widely looked at as a disorder, but that has since changed. She served as a male in the U.S. Air Force from 1967-1974, including duty in Vietnam during the war.
"I don't think [the military] knew what 'transgender' was back then," Michaels said. "If you got caught you'd probably be dismissed and given a Dishonorable Discharge."
Michaels said she privately identified as a women when she enlisted in the military, but kept it hidden for the seven years she served. She said she probably would've stayed in the Air Force, but was just too afraid she'd be "found out" and punished.
"It's about 50 years too late for me, but that's ok," she said of Thursday's announcement.
"I did my time and I enjoyed it. I found out a lot about myself by being in the service," she said. "I'm excited for all the young people who are going to be able to take advantage of this, be able to serve their country."
Secretary Carter said he's directed the military to conduct training for all service members to help them better understand what the end of the transgender ban means for them.
Carter said 18 nations already allow transgender men and women to serve openly in their military.
This story has been updated.
John Ismay | AP