However, it is understood there are currently no transgender women playing competitive football north of the border.
The revised policy was given the go-ahead at a recent board meeting but discussions aimed at updating the current guidelines had been ongoing for some time.
The final decision was taken after the recent Supreme Court ruling that a woman is defined by biological sex under equalities law.
The SFA rule change will see the governing body bring football into line with other sports like rugby, swimming and athletics.
In England, the FA rules state that transgender women can compete in the women's game if they show low enough testosterone levels and they are assessed by a match observer.
There are 20 transgender women registered to play amateur football in England among the millions who play at that level.
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