In Islam, the term mukhannathun is used to describe gender-variant people, usually male-to-female transgender. Neither this term nor the equivalent for "eunuch" occurs in the Quran, but the term does appear in the Hadith, the sayings of Muhammad, which have a secondary status to the central text. Moreover, within Islam, there is a tradition on the elaboration and refinement of extended religious doctrines through scholarship. This doctrine contains a passage by the scholar and hadith collector An-Nawawi:

A mukhannath is the one ("male") who carries in his movements, in his appearance and in his language the characteristics of a woman. There are two types; the first is the one in whom these characteristics are innate, he did not put them on by himself, and therein is no guilt, no blame and no shame, as long as he does not perform any (illicit) act or exploit it for money (prostitution etc.). The second type acts like a woman out of immoral purposes and he is the sinner and blameworthy.[250]Templat:Verify source

While Iran has outlawed homosexuality, Iranian Shi'a thinkers such as Ayatollah Khomeini have allowed for transgender people to change their sex so that they can enter heterosexual relationships. This position has been confirmed by the Supreme Leader of Iran, Ayatollah Ali Khamenei, and is also supported by many other Iranian clerics.

Iran carries out more sex change operations than any other nation in the world except for Thailand. It is regarded as a cure for homosexuality, which is punishable by death under Iranian law. The government even provides up to half the cost for those needing financial assistance and a sex change is recognized on the birth certificate.[251]

On the 26th of June 2016, clerics affiliated to the Pakistan-based organization Tanzeem Ittehad-i-Ummat issued a fatwa on transgender people where a transwoman (born male) with "visible signs of being a woman" are allowed to marry a man, and a transman (born female) with "visible signs of being a man" are allowed to marry a woman. Muslim ritual funerals also apply. Depriving transgender people of their inheritance, humiliating, insulting or teasing them were also declared haraam.[252]