US President Donald Trump has signed a memo reinstating a ban on transgender people serving in the military, which was lifted under Barack Obama.
The memo also halts the use of government funds for sex-reassignment surgery for active personnel.
But Mr Trump left Defence Secretary Jim Mattis to decide whether to retain existing transgender recruits.
“This policy is a shameful slap in the face to people who put their lives on the line everyday to defend our country…” said Jennifer Levi, an official at Glad (GLBTQ Legal Advocates & Defenders), in a statement.
“We are moving quickly with our plaintiffs to see that a court puts a stop to this latest demonstration of President Trump playing politics with people’s lives.”
Between 4,000 and 10,000 US active-duty and reserve service members are believed to be transgender.