The Muslim-majority country, which had a moderate Islam culture, has been witnessing a gradual Islamisation lately. A Reuters report says that many cases challenging Malaysia's religious law have been quashed in civil courts in recent years. In the country, there is a widespread fear that the freedom of expression, religion and gender equality would be lost in the rapid Islamisation.
However, the Friday's court order comes dispels such fears to an extent. According to the Reuters report, the Court of Appeal said the law against crossdressing by Muslim men contravened the country's constitution and did not take account of male Muslims affected by gender identity disorder.
The law and its punishments were "degrading, oppressive and inhuman", the three judges said, said the report.
The case was filed by four transgenders in the country against a lower court's decision in 2012.
The LGBT community in Malaysia are one of the worst-treated in the country. Thanks to systematic abuses by religious authorities and police, a rights group 'Human Rights Watch' had listed Malaysia as one of the worst countries in which to be a transgender person.
the LGBT rights activists welcomed Friday's ruling saying, "now the transgender community know they have their rights to challenge the law and not just plead guilty to charges", said the Reuters report.
It is not yet known whether the prosecution would file an appeal in the country's highest court, the Federal Court.