Trump's announcement came one day before the military was to face a deadline for updating its medical standards to accommodate transgender service members, according to The Washington Post. It comes one month after Trump's defense secretary, James Mattis, delayed the implementation of an Obama administration plan to allow transgender recruits into the military by six months.
Former Vice President Joe Biden criticized the decision in a tweet Wednesday, writing that "Every patriotic American who is qualified to serve in our military should be able to serve. Full stop."
In a statement obtained by NBC, former Defense Secretary Ash Carter said that it's most important the military recruit and retain the most qualified people.
"To choose service members on other grounds than military qualifications is social policy and has no place in our military," he said. "There are already transgender individuals who are serving capably and honorably. This action would also send the wrong signal to a younger generation thinking about military service."
There are an estimated 15,500 transgender people serving in the military, according to a 2014 report from the Palm Center research institute.
Matt Thorn, executive director of OutServe-SLDN, which represents the LGBT population in the military, threatened legal action if the decision was not reversed and told The Associated Press that no issues have come up caused by transgender people serving in the military.
"It's an absolute absurdity and another overstep," Thorn said.
Multiple civil rights groups took to social media to criticize the president's decision.
Transgender service members have been able to serve openly in the military since last year, when former Defense Secretary Ash Carter ended the ban. Since Oct. 1, transgender troops have been able to receive medical care and start formally changing their gender identifications in the Pentagon's personnel system.
The Associated Press contributed to this report.