The thing that causes a person to be transgender has been fairly well nailed down. It's the result of having hormones appropriate to your genetic sex during the first trimester (which is when genital development takes place), but then something going wrong with your hormone production during the later stages of your prenatal development (when the main thing still ongoing is brain development), so that your hormone levels (or more specifically, androgen levels), switch to those more appropriate to the opposite sex from your genetic one during this later stage of development. Most of the things that cause physical intersex conditions can also make this happen, and I think being transgender is best thought of as a form of intersex, except one in which the main effects have been on the brain rather than the genitals.
The early stages of brain development involve very rapid cell division (to build up the enormous numbers of cells needed to produce the human brain), and the migration of those cells from the place where they formed, to where their final place in the brain will be. As a result, although you do have a brain from quite early in embryonic development, for the first 16 weeks after conception, it's continuously being remodelled, and probably because of that, hormone levels during those first 16 weeks don't seem to have any strong effects on the final sex of your brain.
By about 16 weeks, the first cells have reached their final positions in the brain, and then a process of building connections between cells and building the permanent structure of the brain begins (and continues for the remainder of the pregnancy). Hormone levels during that time do make a big difference in the sex of the brain (in fact whether you develop a male or female brain seems to entirely depend on hormones, with X and Y chromosomes playing no significant role at all).
By the time you're born, the critical period when the permanent structure of the brain is built has already largely drawn to a close. Whatever's there by that stage is permanent, and stays with you for the remainder of your life. Gender identity is one of the attributes that's determined by whether you have a male or female brain, and we know that it's already set in stone by the time you're born, because for many years doctors and academics believed the opposite: that people are born "gender neutral", and develop their sense of being a man or a woman from how the people around them treat them during their formative years.
On the basis of that theory, it became standard practice for doctors to operate on baby boys with an abnormal or missing penis, to turn them into a girl (due to the difficulty of surgically constructing a penis). The parents were then told to raise their child as a girl, and all would be well. Then, in 1997, sexologist Dr Milton Diamond heard from David Reimer, the earliest person to have been put through one of these infant gender reassignments, and whose case was supposed to be a resounding success. In fact, it turned out that David had always felt totally out of place as a woman, and ten years earlier had begun taking steps to revert to being male (testosterone injections and surgery).
From Wikipedia:
QuoteThis was later expanded into the New York Times best-selling biography As Nature Made Him: The Boy Who Was Raised as a Girl (2000), in which Colapinto described how—contrary to Money's reports—when living as Brenda, Reimer did not identify as a girl. He was ostracized and bullied by peers (who dubbed him "cavewoman"), and neither frilly dresses (which he was forced to wear during frigid Winnipeg winters), nor female hormones made him feel female. By the age of 13 years, Reimer was experiencing suicidal depression and he told his parents he would take his own life if they made him see Money again. Finally, on 14 March 1980, Reimer's parents told him the truth about his gender reassignment, following advice from Reimer's endocrinologist and psychiatrist. At 14, having been informed of his past by his father, Reimer decided to assume a male gender identity, calling himself David. By 1987, Reimer had undergone treatment to reverse the reassignment, including testosterone injections, a double mastectomy, and two phalloplasty operations.[citation needed] On 22 September 1990 he married Jane Fontane and would adopt her three children.
Notice how similar that is to what FTM trans people often go through!
Psychologists then did a number of studies following up on other similar cases, and it soon became apparent that the same thing was very commonly happening in other cases as well (in fact, in some of the studies I've seen, it looks like they had a 100 percent failure rate!).
From that experience, we know that a person's gender identity is hardwired into their brain, and is something you're born with. Neither genital appearance, nor sex of rearing, nor hormones during puberty, nor anything else can change it.
There are a couple of reasons why there's so much controversy about something that shouldn't be controversial at all. Firstly, for a long time it's been trendy among academics to deny that there are any hardwired differences between men's and women's brains, and that the differences in social status etc between men and women are all the result of men's oppression of women. The fact that we (MTF and transfeminine people) exist at all contradicts that theory, and that's why there's a clique of radical feminists ("TERFs") who have long been trying to deny our existence, labelling us as mentally ill, "extreme gay" etc. Of course, whether they like it or not we do exist, and in fact animal studies show that their theory is bunk. There are innate hardwired differences between male and female brains that drive most of the differences between adult male and female social and sexual behaviour, and furthermore, by messing around with hormones during the prenatal period, it's possible to produce male animals with female brains (or vice versa).
Which brings me to the second point. When it first became possible to mass produce hormones in a laboratory and use them as medicines, the pharmaceutical industry had a bright idea. They decided (on the flimsiest of evidence) that miscarriages were caused by low levels of female hormones (estradiol, estriol and progesterone) in the pregnant mother. If you topped up the mother's hormones with artificial female hormones (mainly an estrogen called DES, and any of several members of the progestin class of hormones), she'd be less likely to miscarry. Or so their theory went. In the decades since, millions of pregnant women have been given these drugs, and the total number of people alive today who were prenatally exposed to one or more of these manmade hormones must be well into the millions.
The way these treatments have typically been prescribed means that most or all of the exposure occurs after genital development has already finished, and during the time sex differences in the brain are thought to arise. Considering how important hormones are in sexual development and in particular, determining the sex of the brain, there's obvious scope for trouble, and in fact many of us MTF/transfeminine people in the over 40s age bracket either know or suspect we were exposed to DES. I've also found a number of case reports showing that two other manmade hormones often given to pregnant women for miscarriage prevention in the 1950s and 60s, ethisterone and norethisterone, turned out to be able to drive male development in female fetuses. I think it's highly likely that there are FTM transgender people who are trans because of being exposed to these two drugs.
DES, ethisterone and norethisterone had all been withdrawn from use during pregnancy by about 1980. However, other artificial female hormones continue to be used. I think the 3 main ones currently used in pregnancy are dydrogesterone, allylestrenol and hydroxyprogesterone caproate, all members of the progestin class of hormones. In adult men, these are feminising hormones, and they can actually be used as part of MTF trans HRT. Whether these currently used hormone treatments are continuing to make people trans is an open question, but I think it's certainly a possibility that should be looked at!
For people interested in further reading about the science of prenatal hormones in determining gender identity, this is a good paper to read (and it's published as Open Access, so the full paper can be viewed or downloaded free of charge):
Sexual differentiation of the human brain in relation to gender identity and sexual orientation.https://www.ncbi.nlm.nih.gov/pubmed/19403051