Transgender: An umbrella term (adj.) for people whose gender identity and/or gender expression differs from the sex they were assigned at birth. The term may include but is not limited to: transsexuals, cross-dressers and other gender-variant people. Transgender people may or may not decide to alter their bodies hormonally and/or surgically.
Gender identity: One's internal, personal sense of being a man or a woman (or a boy or a girl).
Gender expression: External manifestation of one's gender identity, usually expressed through “masculine,” “feminine” or gender-variant behavior, clothing, haircut, voice or body characteristics. Typically, transgender people seek to make their gender expression match their gender identity, rather than their birth-assigned sex.
Transsexual: An older term that originated in the medical and psychological communities. While some transsexual people still prefer to use the term to describe themselves, many transgender people prefer the term transgender to transsexual.
Transition: A complex process that occurs over a long period of time and includes some or all of the follow¬ing: telling one’s family, friends and/or co-workers; changing one's name and/or sex on legal documents; hormone therapy; and possibly (though not always) one or more forms of surgery.
Sex reassignment surgery: Refers to surgical alteration, and is only one small part of transition. Preferred term to “sex-change operation.” Not all transgender people choose to or can afford to have surgery.
Sexual orientation: Describes an individual's enduring physical, romantic and/or emotional attraction to another person. Gender identity and sexual orientation are not the same. Transgender people may be straight, lesbian, gay or bisexual. For example, a man who transitions from male to female and is attracted to other women would be identified as a lesbian or a gay woman.
Source: National Center for Transgender Equality; The Gay and Lesbian Alliance Against Defamation (GLADD)