Trump said he plans to reinstate a ban on transgender individuals from serving "in any capacity" in the US military.
Trump said he took the decision after consulting over the issue with his Generals and military experts.
Trump cited "tremendous medical costs and disruption" as the reason behind taking the move.
"After consultation with my Generals and military experts, please be advised that the United States Government will not accept or allow Transgender individuals to serve in any capacity in the U.S. Military. Our military must be focused on decisive and overwhelming.....victory and cannot be burdened with the tremendous medical costs and disruption that transgender in the military would entail. Thank you," Trump tweeted.
Last year, former President Barack Obama-led administration had decided to allow transgender people to serve the country's military openly.
Defence Secretary James Mattis in June decided to delay the recruitment process of transgender people by six months, reports said.
Meanwhile reactions poured in as Senator Ron Wyden tweeted: “Shutting out transgender Americans who want to serve our country makes us less safe, not safer.”
US based LGBTQ support organization Diverse & Resilient tweeted: "We stand in solidarity with the Trans community."
"When I read the president's tweets this morning, it's really just a violation of our mission," said Kathy Flores, anti-violence manager with the group.