I picked up this list, written by Timothy Hulsey, on Amazon and think it is as good a place to start as any.
The Marvelous Land of Oz by Frank BaumThe only one of the above I've already read is Orlando, so I have some catching up to do. (Think I'll start with the Jackie Kay. But then hey, I love Jan Morris' travel books and didn't know she'd written fiction ...)
As far as I know, this 1904 children's novel is the first in American literature to feature a transgendered protagonist. (And yes, she does undergo an "operation" of sorts near the end.)
Last Letters from Hav by Jan Morris
Transgendered travel writer Jan Morris writes about an imaginary destination where her status as woman (or "Dirleddy") is never questioned. Her memoir Conundrum is deservedly famous.
Stone Butch Blues by Leslie Feinberg
Personally, I don't think very highly of Stone Butch Blues. But every time I let a transgendered friend borrow the novel from me, I have to buy another copy. (Funny how that works.)
Trumpet by Jackie Kay
Not nearly as good as Diane Middlebrook's biography Suits Me which covers the true events on which the novel was based.
Myra Breckinridge/Myron by Gore Vidal
Vidal is overrated as a "serious" novelist, but his comic novels can be quite good. Both Myra and Myron, though unrealistic, feature a very prominent transgendered character.
Orlando: A Biography by Virginia Woolf
More an exploration of shifting sexuality than a "how-to" book, Virginia Woolf's Orlando is still a great transgender novel.
The novel that I would add to the list would be Jeffrey Eugenides' Middlesex - a girl who discovers at puberty that she is in fact a hermaphrodite, and has a tough decision about to make about which gender to choose. Really superb writing as well as an excellent story.
I know only one transexual - an American internet friend whose story has greatly moved me. His decision to become a woman was a serious and long considered one. (I quickly realised that this is not something that anyone does without the deepest conviction.) John detailed every stage of his journey to become a Jennifer, and for sure there's a book in there if she can be persuaded to write it.
Because really wouldn't all of us like to slip behind the scenes and know how it feels to belong to the other sex? Ah well, at least fiction allows us that privilege vicariously!