In a series of tweets, United States President Donald Trump said transgender individuals will not be accepted or allowed in the US military.
The President said the announcement follows consultation with generals and military experts.
Mr Trump said the military must be focused on decisive and overwhelming victory and cannot be burdened with what he called "the tremendous medical costs and disruption" enatiled by transgender in the military.
White House Press Secretary Sarah Sanders says implementation of the policy is yet to be worked out, but transgender personnel erode military readiness and unit cohesion.
"The decision is based on a military decision. It's not meant to be anything more than that. And it's simply about, obviously it's a very difficult decision, it's not a simple one but the President feels that it's the best one for the military."
The move would reverse President Barack Obama's efforts to open the armed services to transgender people.
The administration has not said what would happen to transgender troops already in the military.
Advocates say there are between 13,000 and 15,000 service members and hundreds of thousands of veterans who are considered transgender.
Executive Director of the National Centre for Transgender Equality, Mara Keisling, says all Americans should be alarmed by the announcement.
"To have the Commander in Chief just arbitrarily and capriciously say he's going to fire 15,000 service members for no good reason - that's terrifying. It should be terrifying to all Americans, putting 15,000 holes in our military readiness all at once for who knows what reason?"
Ms Keisling says studies consistently show trans people are much more likely than the general public to be veterans, to have served and to be anxious to participate in the military.
"So these folks have been real heroes. They are trying to do their jobs and their Commander-in-Chief has just cut them off at the knees."
Former soldier and trans woman Chelsea Manning, released from prison in May after serving seven years for disclosing secret military documents to Wikileaks, has accused the President of cowardice.
She tweeted that the armed forces have always been a social experiment as much as a fighting force.
Staff Sergeant Patricia King was America's first soldier to come out as transgender two years ago and is currently serving in the army.
She's told the BBC she's shocked by the announcement.
"You know, every time I went to Afghanistan I was transgender. I may not have come out yet but I was transgender and I knew who I was. Every time I've jumped out of an airplane I was a transgender person. Every time I've laced up my boots and come to work, I've been this person, but more importantly I've been an soldier. And I've shown up ready to work and do my job."
Trans US Air Force veteran Vanessa Sheridan is also concerned, saying the move could lead to trans people becoming a target of hate crimes.
"It's just disappointing we're seeing this ruling here. We thought that trans people were going to be able to serve openly and that everyone was going to benefit as a result of this. In my experience, that would have been a real benefit to the military and to the trans community both. Now we're not going to see that happen. And from a personal standpoint, I can tell you that, you know, having been in the military, it's just a sad thing. And it's detrimental to the ability of an individual to perform their work as effectively as they might otherwise be able to do."
A ban on transgender people serving openly in the military ended in 2016 under President Obama, but a year-long review was undertaken.
Several Republican members of Congress are urging the Trump administration to reverse the decision.
Reinstatement of the ban is contrary to Mr Trump's 2016 campaign rhetoric, when he promised to be a strong defender of the LGBTQ community.
After a terrorist attack at a gay nightclub in Orlando, Florida, he promised to be a better friend to the community than his opponent, Hillary Clinton.
"As your President, I will do everything in my power to protect our LGBTQ citizens from the violence and oppression of a hateful, foreign ideology. Believe me."
In February, President Trump also reversed an Obama-era policy allowing transgender students to use the bathroom of their choice.
