North Aceh police chief Ahmad Untung Surianata and several of his subordinates have been questioned by the police internal affairs unit following raids on beauticians' premises in which 12 transgender staff were detained.
Officers were said to have forcibly cut the hair of some of them and made them wear male clothing and speak in a masculine voice.
Surianata said at the time that mothers had complained the transgender people were teasing their sons.
Sanctions range from a written reprimand to suspension.
The investigation into the raids sparked an angry protest last Friday amid rising anti-LGBT sentiment in the province.
Prejudice against gay and transgender people has long been widespread in Indonesia, which has the world's largest Muslim population. Parliament is set to pass a long-dormant bill to make sex outside marriage, including gay relations, illegal.
The discrimination is particularly acute in Aceh on Sumatra island, the only province to be ruled by Islamic law since it was granted special autonomy in 2001.
Some beauty shops who employed transgenders have closed down while many beauticians were considering fleeing the province.
"The current situation is very uncomfortable to us. We are now in fear," a 33-year-old long-haired transgender, who requested anonymity, told AFP Saturday at her beauty shop.
"At the moment, I avoid leaving home at night, it's too scary."
Nasir Djamil, the lawmaker who joined the protest on Friday, said: "LGBT is forbidden by Islam. We shall continue efforts to educate them (transgenders) because they are also our brothers."
"I don't know why they used Hello Kitty. I was only invited to join the rally," Djamil of the Islamic PKS party told AFP.
Last month a Christian was publicly flogged for selling alcohol, making him only the third non-Muslim to suffer a public whipping under Aceh's Islamic law.
Human rights activists condemned the police roads on beauticians.
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