The American Civil Liberties Union has filed a legal challenge to US President Donald Trump's directive banning transgender service personnel.
The case was filed on behalf of six serving transgender members of the armed forces.
Mr Trump signed a memo to reinstate a ban on transgender people serving on Friday, after announcing it on Twitter last month.
The policy was lifted by Barack Obama's administration last year.
The ACLU argues that the ban is discriminatory and violates constitutional guarantees of equal protection.
It described the ban as "cruel" and being based on "myths and stereotypes" and a "desire to harm transgender people".
It was the second lawsuit announced on Monday, after a separate complaint was filed on behalf of LGBT groups and three other transgender individuals. Two sought to join the armed forces, and a third is already a serving member.
Between 4,000 and 10,000 US active-duty and reserve service members are believed to be transgender.
After consultation with my Generals and military experts, please be advised that the United States Government will not accept or allow......
On a statement on the ACLU website, Joe Block, a senior staff lawyer for the ACLU's LGBT & HIV Project said: "Each and every claim made by President Trump to justify this ban can be easily debunked by the conclusions drawn from the Department of Defence's own review process.
"Allowing men and women who are transgender to serve openly and providing them with necessary health care does nothing to harm military readiness or unit cohesion."
Photo by: AFP Image Caption: The US President said transgender people should not serve in the military 'in an capacity'