I was conceived in early spring 1946, out of wedlock. I can only imagine the emotional stress my mom must have endured during that point in history. She and my father, a big band musician, married that June. He had to quit playing music and go find a "real" job, which caused him to become an unhappy person who took it out on the rest of the family. Oh, yeah, my mom smoked and drank through my gestation, too. I share those facts from my history because I think they have some relevance.
I've done a fair amount of reading on the subject transsexualism and brain chemistry. Frankly, there are some hypotheses on the causes that sound pretty convincing to me, but nothing has been conclusively proven. I'm most comfortable with the concept that quantity and timing of appropriate hormones during fetal development have much to do with the gender identity of the child after birth. While chemical intervention from docs, as Hugh argues, is likely the cause in some cases, the timing and quantity of hormones is probably the culprit in most.
The nice thing about timing and quantity is that it accounts for both MtF and FtM throughout history. It isn't dependent on medical advances to account for the existence of transsexuals.
Could the stresses of being a single, pregnant woman in the mid-1940s have altered hormone delivery? I don't know if my mom was given synthetic estrogen, or other drugs, during her pregnancy. I also don't know if her smoking/drinking affected testosterone delivery. In 1950, when I first expressed my non-conforming thoughts, I learned very quickly to suppress, suppress, suppress. After me, my parents produced three daughters, none had gender identity issues.
As you can see, I'm new here, and didn't want to miss making a timely post on this thread. I'll see if I can find any of the research I read. I had everything on a laptop that was stolen a few years ago. I haven't bothered to recreate my files.