Transexuality is probably genetic in origin but you can't point to one gene, so it isn't as simple as hair color. I think that complex behaviours like transexuality or indeed intelligence are controlled by networks of genes. The genes are the fundamental unit of heredity. The fate of the genes are what matter to the logic of life. The fate of one organism (e.g. a man) is not important to this logic, only the genes. In addition, we are all mixes of a finite set of genes. The same genes in you are, to a large degree, in me, with only small admixtures from other pools. (There is a simple proof of this but I won't bother you with it.) The small differences make us unique, but they are small on the scale of all living systems. From this discussion already one can see why homosexuality or transexuality may be natural: consider, for example, a homosexual who never reproduces. One might suspect his genes are disfavored and would die out since they would not be observed in future populations. However, this is incorrect because his genes are also in other people in different mixtures. If the same genes in other people are successful at copying themselves (reproduction) they will be observed in the future.

I think there is, in each person, genes that cause us to desire men and other genes that cause us to desire women. The two networks may overlap, i.e. share genes. Added to this, I guess, is a third class of genes that "turn on" or "turn off" the expression of the genes that cause desire. So the genes that make you desire women may be latent since they were not turned on. One of the big advantages of sexual reproduction, as opposed to asexual, is that it mixes and reshuffles genes. These leads to greater diversity, which makes the species more robust against a changing environment. Possibly it may help cull out weakness too (weak genes being less likely to reproduce), but evidentally homosexuality (and transexuality) are not weaknesses since they've always been a certain percentage of the population. The fact that sex is an advantage is proven by noticing that nearly all species reproduce by sex. Therefore it must have been a very early and powerful step in evolution that has affected nearly all life.

So I think transexuality is an inevitable consequence of this reshuffling of the network of genes that govern sexuality. It's one of the possible "hand of cards" that you may be dealt at birth. Nothing wrong with it and completely natural. But I bet the forum already knew that without all this gene stuff.

BTW, when it comes to biology I'll admit I am an amateur. A lot of the ideas here come from others but I'm too lazy to give attribution. Some of the ideas are my own and I don't know if they have merit to someone who is an expert. Maybe not. But it's fun think about (for a nerd) and something that has puzzled me ever since I got interested in transexuality.