Mr Trump said on Twitter that after consulting with “generals and military experts” the US government “will not accept or allow Transgender individuals to serve in any capacity in the US Military”.
He added: “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.”
Transgender service members have been able to serve openly in the American military since last year, when former US defence secretary Ash Carter ended the ban.
Military chiefs recently announced a delay on allowing transgender people from enlisting.
However, transgender troops are already serving openly in the military.
Mr Trump’s announcement did not say what would happen to those transgender people already serving.
There are as many as 250 service members in the process of transitioning to their preferred genders or who have been approved to formally change gender within the Pentagon’s personnel system, according to several defence officials.
Since October 1, transgender troops have been able to receive medical care and start formally changing their gender identifications in the Pentagon’s personnel system.
But Mr Carter also gave the services until July 1 to develop policies to allow people already identifying as transgender to newly join the military, if they meet physical, medical and other standards, and have been stable in their identified genders for 18 months. Military chiefs recently announced a delay on allowing transgender people from enlisting.
Key concerns include whether currently enlisted troops have had medical or other issues that cause delays or problems with their ability to deploy or meet physical or other standards for their jobs.
Military leaders also want to review how transgender troops are treated, if they’re discriminated against or if they have had disciplinary problems, the officials said.