The Transgender Persons (Protection of Rights) Act, 2018 is an exclusive statutory law  dealing with the rights of transgender persons in Pakistan, the greatest strength of which is the right given to transgender persons to be recognized based on their self-perceived gender identity. However, in its recent judgement, the Federal Shariat Court struck down some of the key sections of this act by declaring them unIslamic. Gender is a social construct and is different from the biological sex. Gender identity, which is the innermost feeling of a person, cannot be changed. Moreover, transgender identity is not a mental disorder and is different from gender dysphoria. This paper discusses the transgender law in Pakistan in detail and the insights from the field of mental health to understand the transgender phenomenon and to handle transgenders' rights in Pakistan by bridging the gaps between the understandings of relevant stakeholders.