The order, signed by Mayor Bill de Blasio and effective immediately, means that city employees and members of the public can access whichever single-sex toilet they prefer without having to show ID or any form of gender proof.
"Access to bathrooms and other single-sex facilities is a fundamental human right that should not be restricted or denied to anyone," said de Blasio.
"New York City is the birthplace of the fight for LGBT rights, and we continue to lead in that fight so every New Yorker can live with dignity," he added.
Under New York law, employers and housing providers can be prosecuted for denying access to single-sex facilities based on gender identity. There are an estimated 25,000 transgender people living in New York.
The new order applies to city-owned buildings, public parks, pools, playgrounds, some museums and recreation centers.
According to a 2011 US survey of more than 6,400 people, 22 percent of respondents reported being denied access to appropriate bathrooms at work and 26 percent to being denied access to bathrooms in an educational setting.
Charlotte, North Carolina recently passed similar legislation to New York and the Republican governor of South Dakota vetoed legislation last week that would have prevented public school students from accessing the bathroom and locker rooms of their choice.
But in November, Houston, the country's fourth largest city, rejected legislation that would have enshrined transgender bathroom rights after campaigners argued it could have been exploited by sexual predators dressed as women.
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