The aim of this review paper was to investigate variations in sex differentiation, andalso, examine what neurobiological underpinnings there are to gender identity andgender dysphoria. In addition, the most extreme form of gender dysphoria,transsexuality, will be described from a neurobiological perspective but also discussedin terms of the classification from DSM-5. One theory considered on how genderidentity originates is the fact that the sexual differentiation of the brain and thedifferentiation of sexual organs develop during different time periods. Alterationswere displayed in a demonstration of male-to-female (MTF) and female-to-male(FTM) transsexuals that showed reversed results in cell number in a part of thehypothalamus, acronymized INAH-3 and reversal volume results in another region,acronymized BSTc. Likewise, differences in grey matter in the right putamendepended upon their natal gender. It can be concluded that there is biologicalevidence for sex differentiation and indications that lead science into consideringbiological components for gender dysphoria. This conclusion suggests for futureresearch questions focused more on the possible genetic factors of gender identity,also, consider larger sample sizes and more replications. There is still incompleteknowledge of what exactly constitutes an individual’s gender identity.