Athletes who have undergone sex-change operations could be eligible to compete in the Olympic Games.
The new policy could be adopted in time for the 2004 Games in Athens after the International Olympic Committee's medical commission gave its approval.
"We will have no discrimination," said IOC medical director Patrick Schamasch. "The IOC will respect human rights.
"The trend is to have an ineligibility period then, after certain conditions have been fulfilled, the athlete will be able to compete in his or her new sex."
The IOC hopes the rule, which covers both male-to-female and female-to-male transsexuals, will bring decades of rumour and accusations to an end.
"The eligibility of transsexuals to participate needs to be clarified and dealt with," said Arne Ljungqvist, the IOC medical commission chairman .
One of the best-known transsexuals in sport involves Renee Richards, formerly Richard Raskin, who played on the women's tennis tour in the 1970s.
More recently, Canada's Michelle Dumaresq made news competing as a mountain bike racer.
Formerly Michael, Dumaresq had sex reassignment surgery in 1996 and competed for Canada at last year's World Championships in Austria. She finished 24th in the downhill discipline.