The lawsuit, brought by a plaintiff known only as "Sandy," is the first of its kind under a 1979 city ordinance that prohibits businesses from discrimination based on sexual orientation, "Sandy's" attorney, Gloria Allred, told Reuters.
"Sandy is not required to appear as a man because she is a man or has male genitalia," said Allred, a high-profile Los Angeles lawyer.
When he enrolled last month at the Marinello School of Beauty in Los Angeles, Sandy was perceived to be a woman, Allred said.
After passing a test and paying a $100 fee, he was accepted to the school and told to report for classes in August. "Sandy was very happy, but her happiness did not last very long," Allred said, referring to her client as a woman. "It had been her dream to attend beauty school."
Two hours later, after learning from Sandy's passport that she was legally a man, school officials called to say that she would not be permitted to attend classes because of concerns over which restroom he would use at school, Allred said.
Sandy offered to use the restroom of the school's choice or to go off campus to answer nature's call but the school refused the offer, Allred said.
"I have never ever fought for anything in my life but now it is time to fight for my rights," Sandy told reporters at a news conference Wednesday.
School officials had no comment on the lawsuit.
The Los Angeles ordinance that Allred cited in the lawsuit defines sexual orientation not by physiology, but as "a self image not associated with one's biological maleness or one's biological femaleness."
Sandy, who surprised her friends by coming out as a man, told Reuters that his dream is to open his own salon.
"I want to make people look nice and look good and I want to make people happy," he said.