Under a proposal approved by the IOC executive board, athletes who have undergonewill be eligible for the Olympics if their new gender has been legally recognized and they have gone through a minimum two-year period of postoperative hormone therapy.
The decision, which covers both male-to-female and female-to-male cases, goes into effect starting with the Athens Olympics in August.
The IOC had put off a decision in February, saying more time was needed to consider all the medical issues.
Some members had been concerned whether male-to-female transsexuals would have physical advantages competing against women.
Men have higher levels ofand greater muscle-to-fat ratio and heart and lung capacity. However, doctors say, testosterone levels and muscle mass drop after hormone therapy and sex-change surgery.
IOC spokeswoman Giselle Davies said the situation of transsexuals competing in high-level sports was "rare but becoming more common."
IOC medical director Patrick Schamasch said no specific sports had been singled out by the ruling.
"Any sport may be touched by this problem," he said. "Until now, we didn't have any rules or regulations. We needed to establish some sort of policy."
Until 1999, the IOC conducted gender verification tests at the Olympics but the screenings were dropped before the 2000 Sydney Games.
One of the best known cases of transsexuals in sports involves Renee Richards, formerly Richard Raskind, who played on the women's tennis tour in the 1970s.
In March, Australia's.
Michelle Dumaresq, formerly Michael, has competed in mountain bike racing for Canada.
Richards, now a New York opthamologist, was surprised by the IOC decision and was against it. She said decisions on transsexuals should be made on an individual basis.
"Basically, I think they're making a wrong judgment here, although I would have loved to have that judgment made in my case in 1976," she said.
"They're probably looking for trouble down the line. There may be a true transsexual - not someone who's nuts and wants to make money - who will be a very good champion player, and it will be a young person, let's say a Jimmy Connors or a Tiger Woods, and then they'll have an unequal playing field.
"In some sports, the physical superiority of men over women is very significant."