Japan's top court said on Wednesday that requiring transgender people to be sterilised in order to change their legal gender was unconstitutional.
The claim that requiring they also undergo gender affirmation surgery is also unconstitutional will be sent back to a lower court for further deliberation, the court said.
The sterilisation rule "restricts a person's free rights not to have their bodies invaded against their will," the Supreme Court said in a keenly awaited decision overturning its own 2019 ruling.
Under rules introduced in 2004, transgender people applying to legally change their gender must meet criteria including forfeiting reproductive capacity - effectively meaning sterilisation.
Other conditions include being unmarried, not having children and being officially diagnosed with gender dysphoria.
Only a handful of countries around the world allow transgender people to change their status with a simple declaration.
But campaigners say that conditions imposed by Japan, the only Group of 7 wealthy countries that do not recognise same-sex marriage or civil unions at a national level, forced people into highly invasive, lengthy and potentially risky medical procedures.
"The procedure for changing one's legally recognised gender, which requires sterilisation surgery and an outdated psychiatric diagnosis, is anachronistic, harmful, and discriminatory," Human Rights Watch said in a 2019 report.
The advocacy group blasted it as rooted in a "pejorative" notion that transgender identity amounts to a "mental illness".
Pressure though had been building ahead of Wednesday's decision, with a regional family court ruling this month that the sterilisation criteria were "unconstitutional and invalid".
Recent years have seen traditionally conservative Japan take small steps towards embracing sexual diversity.
In July, Japan's Supreme Court ruled in favour of a transgender bureaucrat who sued the government over access to female toilets at work.
Opinion polls have shown growing support for LGBTQ-friendly laws, especially among younger people, but the ruling Liberal Democratic Party has been reluctant to push ahead with reforms.
And in recent months activists have warned of a rising tide of hateful online rhetoric, particularly targeting transgender women, fuelled in part by contentious debate around anti-discrimination legislation that passed this year, albeit in watered-down form.
'Still in pain'
At the heart of Wednesday's case was a transgender Japanese woman seeking to be legally listed as female without surgery.
She has called the obligation to be sterilised a "grave human rights violation and unconstitutional".
"It's extremely rare for the Supreme Court to rule a law unconstitutional," her lawyer Kazuyuki Minami told reporters on Wednesday.
He added though that it was "sad" that the applicant still "will have to live tomorrow and beyond with her gender not recognised by the law."
This was the second time the Supreme Court has weighed in on the constitutional question of the sterilisation requirement, having ruled it "constitutional as of now" in 2019.
Judges had defended the requirement as meant to preclude "confusion" that can arise from transgender people having children after changing their legal gender.
Wednesday's top court ruling has been hotly anticipated among Japan's transgender community, including 34-year-old transgender man Tomoya Asanuma.
At 23, Asanuma's womb and ovaries were removed in order to legally change gender and be allowed to marry his female fiance at the time.
"Making surgery a condition for changing legal gender is too risky for trans people in all aspects - physically, emotionally and financially," Asanuma said.
"I am still in pain. It's really frustrating to think I wouldn't be suffering as much as I am now if only I had been allowed to change my gender without surgery."