President Trump has scrapped protections for transgender students that had allowed them to use bathrooms matching their gender identity.
In a letter released on Tuesday night, the Justice and Education departments informed the nation's schools and the Supreme Court that it was revoking Obama-era guidance on transgender student rights.
Former President Barack Obama had issued a directive in May 2016 requiring schools across America to allow transgender students unrestricted access to bathroom facilities that align with their chosen gender.
But despite expressing some sympathy for the transgender community during his campaign, Mr Trump has reversed the Obama administration's policy and empowered states to decide for themselves.
Mr Trump's decision puts his administration - which has endured a turbulent first month in office - on a collision course with LGBT and human rights groups.
Gay rights activists immediately voiced their disgust, gathering outside the White House to chant: "No hate, no fear, trans students are welcome here."
Social and religious conservatives, many of whom believed the previous policy endangered children, hailed Mr Trump's action.
As well as dividing the country, the debate also reportedly divided Mr Trump's cabinet, pitting Education Secretary Betsy DeVos against Attorney General Jeff Sessions, who is against greater rights for gay and transgender people.
Ms DeVos argued that the decision could leave transgender students exposed to discrimination and bullying, according to the New York Times.
But Mr Trump overruled his education secretary and sided with Mr Sessions.
Unlike some Republicans, Mr Trump has previously extended an olive branch to the transgender community.
In April, he said a transgender person should "use the bathroom they feel is appropriate".
He also agreed that the transgender celebrity Caitlyn Jenner should be able to use any bathroom she wanted at Trump Tower in New York.