The memo does allow for some leeway in implementing the policy.
"The Trump-Pence administration's continued insistence on targeting our military families for discrimination is appalling, reckless, and unpatriotic", said Ashley Broadway-Mack, president of the American Military Partner Association and spouse of an active duty Army officer.
At least one openly transgender recruit has already signed a contract to join the US military since a federal court ruled late past year that the military would have to accept transgender individuals.
According to Defense Department memorandum, the new policy will allow some transgender members to serve while barring any who have been diagnosed with gender dysphoria or undergone a gender transition, and are willing to serve in their biological sex.
Despite the memo, the Pentagon began accepting transgender recruits again on January 1, complying with federal court orders calling for a halt to the ban while it was being legally challenged.
The ban on transgender troops was lifted in June 2016 when then-Defense Secretary Ash Carter permitted those already in uniform to begin serving openly and ordered the military branches to begin preparing to accept new recruits by July 1, 2017.
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Trump's decision to keep the ban comes one month after a Washington Post report suggested that Defense Secretary Jim Mattis would urge Trump to allow transgender citizens to continue serving in the military.
Earlier Friday, Maj. David Eastburn, a Pentagon spokesman, said the announcement of a new policy would not immediately affect the military because the Pentagon is obliged to continue to recruit and retain transgender people in accordance with current law.
"The new policy developed through an extensive study by senior uniformed and civilian leaders, including combat veterans", she said.
However, the actual number of transgender service members is still unknown, primarily because military personnel records do not now track transgender individuals.
"In service to the ideological goals of the Trump-Pence base, the Pentagon has distorted the science on transgender health to prop up irrational and legally untenable discrimination that will erode military readiness", said Aaron Belkin, who has studied transgender issues for the Palm Center, a think tank that had worked with the Obama administration in repealing the previous ban.
Mattis went on to say that exempting transgender individuals from mental fitness tests undergone by other service members would have a negative effect on overall troop readiness. It is more evidence that Trump is anti-LGBT, despite what the Log Cabin Republicans and Gays for Trump claim.
Critics have warned this ban will force transgender individual to hide their identities and reinforce harmful stereotypes about transgender people, more importantly the military will miss out on talented people who want to serve their country.