"For many transgender people, discrimination is a daily part of life," says Michael Silverman, an attorney with the fund. "Unfortunately for Coy, it has started very early."

"The world is going to be looking at the school," he said, adding that the case can "send a message to the world and teach tolerance, fair play and equal rights."

A little-studied group

Transgender children experience a disconnect between their sex, which is based on their anatomy, and their gender, which includes behaviors, roles and activities, experts say.

For the general public, transgender identity may be a new concept, though many might recall Chaz Bono, the child of entertainers Sonny and Cher. Born female, Bono underwent a transition in his 40s to become a man. He wrote in his book "Transition" that, even as a child, he had been "aware of a part of me that did not fit."

He appeared last year as a man on "Dancing with the Stars," in part, he said, to destigmatize being transgender.

Comprehensive data and studies about transgender children are rare. International studies have estimated that anywhere from 1 in 30,000 to 1 in 1,000 people are transgender.

Some children as young as age 3 show early signs of gender dysphoria, or gender identity disorder, mental health experts who work with transgender children say.

These children are not intersex -- they do not have a physical disorder or malformation of their sexual organs. The gender issue exists in the brain, though experts do not agree on whether it's psychologically or physiologically based.

Many transgender people report feeling discomfort with their gender as early as they can remember.

Gender identity is often confused with sexual orientation. The difference is that "gender identity is who you are, and sexual orientation is who you want to have sex with," said Dr. Johanna Olson, a professor of clinical pediatrics at the University of Southern California, who treats transgender children.

Children around age 3 are probably not interested in sexual orientation, she said. But experts say some children who look like they will be transgender in early childhood turn out to be gay, lesbian or bisexual.

School policies toward transgender students vary across the United States.

In New York, for example, the law says students can't be discriminated against on the basis of their gender identity.

But in Maine, a court ruled in November that a school district did not violate a transgender student's rights when she was told she couldn't use the girls' bathroom.

Reaction to Coy's story

CNN's online audience has responded to this story with a range of questions and comments, with many insisting the child is too young to comprehend gender differences. Mostly, posters said they felt sorrow for Coy as a child who is struggling.

"Just let the kid use the gender-neutral bathrooms. When he/she is a teen, if he is still convinced he is a girl, maybe then you can get into it with the school," said commenter EDM.

"This kid is going to have a hard enough life if he really is transsexual, why start fighting battles now, when he should just be blissfully ignorant"?

Commenter AlawJ said the story left a "negative impression of the parents."

"My rash view may be unfair, but I remember being that age and have helped raise 9 nieces and nephews. One wanted to be a firetruck and ran around making truck noises. Another one of the boys liked to play dress up with the girls," AlawJ wrote. "My fiance's little brother always wore dresses as well. But, at the end of the day, the parents are there to be the adults and make decisions for them.

"I also am a little weary when you read a story where the parents are filing lawsuits for their 6 year old child's rights."