Transsexualism describes the condition when a person's psychological gender differs from his or her biological sex and is commonly thought to arise from a discrepant cerebral and genital sexual differentiation. This review intends to give an extensive overview of structural and functional neurobiological correlates of transsexualism and their course under cross-sex hormonal treatment. Research in this field enables insight into the stability or variability of gender differences and their relation to hormonal status. For a number of sexually dimorphic brain structures or processes, signs of feminisation or masculinisation are observable in transsexual individuals, which, during hormonal treatment, partly seem to further adjust to characteristics of the desired sex. Still, it appears the data are quite inhomogeneous, mostly not replicated and in many cases available for male-to-female transsexuals only. As the prevalence of homosexuality is markedly higher among transsexuals than among the general population, disentangling correlates of sexual orientation and gender identity is a major problem. To resolve such deficiencies, the implementation of specific research standards is proposed.