St Catharine's, founded in 1473, has always insisted on male students wearing a jacket, tie and smart trousers while women had to wear a blouse and skirt or dress.
But after a campaign by Charlie Northrop, 25, who began transitioning from male to female last year, college officials have agreed to rewrite the rules.
The college has become the first at the 800-year-old university to change the formal dress code, 'The Daily Telegraph' reported.
Students who do not define themselves as male or female can chose either. It is hoped the change will make transgender students feel more comfortable and the college in line with 21st century gender notions.
"I'm over the moon, it's absolutely wonderful that it's now been passed," said Northrop, a PhD student.
"It wasn't that there was much resistance, it's just the new wording had to be sound and there was a lot of conversations between the college and the committee, Northrop added.
The new dress code on the Dean's Notice states: "Formal Hall is an occasion on which all members of St Catharine's should wear gowns. Members and their guests must be dressed in suitably smart dress".
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