Such an interpretation would reverse the expansion of transgender rights that took place under the previous administration of President Barack Obama.
Since news of the memo broke, the organisation has launched a #WontBeErased hashtag on Twitter and called for supporters to attend a protest rally at the White House on Monday 22 October.
"Sex means a person's status as male or female based on immutable biological traits identifiable by or before birth", according to the memo obtained by the Times.
Relaxations of rules on gender identity to allow people to choose whether they define themselves as male or female have caused arguments over the use of toilets and dormitories, as well as whether public funding should be spent on upholding transgender rights. Such a definition would essentially be a government declaration that there is no such thing as "transgender".
Author Celeste Ng slammed the radical proposal, as "cruel".
Maj. David Eastburn, a Pentagon spokesman, said the announcement of a new policy would have no immediate practical effect on the military because the Pentagon has been obliged to continue to recruit and retain transgender people in accordance with current law.
American Civil Liberties Union attorney Chase Strangio tweeted Sunday: "I know folks are scared and hurt. So am I. We are working to stop this and we will never give up".
Trump's Department of Health and Human Services is spearheading an effort to legally exterminate transgender people at a federal level, and define gender "as a biological, immutable condition determined by genitalia at birth" according to a report in the NYT.
It went on to say: "The sex listed on a person's birth certificate, as originally issued, shall constitute definitive proof of a person's sex unless rebutted by reliable genetic evidence".
"Setting a destructive precedent, the Trump-Pence administration intends to erase LGBTQ people from federal civil rights protections and eviscerate enforcement of non-discrimination laws", the group's president, Chad Griffin, said in a statement.