Sex change surgery has been practised in Iran under Ayatollah Khomeini's fatwa in 1982. Therefore, a medical and judicial process of transition has been regulated accordingly. However, this has not resulted in either the legalization of sex change surgery, nor in the recognition of transsexual identity within Iranian substantive law. Sex change surgery is allowed through Islamic law, rather than substantive law, in response to the existing social facts and norms, on the one hand, and structural cooperation with medical system, on the other. In this article, I argue that the Iranian heteronormative law's understanding of transsexuality has amounted to the misrecognition of trans persons' status within law and society. Using semi structured interviews, intersectional content analysis, and feminist methodologies, the findings indicate that transsexual bodies have gained meaning through religious and medical discourses within a framework of power relations, and that Iranian transsexual persons have reconstructed and redefined gender and gender relations in a way that informs their understanding of gender and sexuality beyond the existing Islamic legal and social norms. Moreover, intersectional analysis of the interviews demonstrates how the legal misrecognition of transsexuality creates space for a discourse which in itself leads to the misrecognition of other gendered identities, such as homosexuals and transwomen.