Decorated military veteran, Paula Sophia Schonauer, has been living more than a decade as a transgender woman.
She said she was honorably discharged after coming out which is a practice she hopes will soon change.
U.S. District Judge Marsha Pechman issued her ruling to lift the ban on Monday.
She said the ban likely violates a person's right to due process and equal protection under the law.
The Trump administration is asking U.S. District for the District of Columbia to stay lifting the ban pending the outcome of an appeal they have in the works.
The Pentagon recently issued a statement that they will be accepting qualified trans applicants starting Jan. 1.