The term transvestitism has undergone several changes of meaning since it was coined in the 1910s; and, unfortunately, it is still used in all of these meanings except the very first one. Therefore it is important to find out, whenever the word is encountered, in which particular sense it is used.
To understand the different meanings of transvestitism it is necessary to explain the development of the term and the reasons behind the changes of meaning.

Magnus Hirschfeld coined the term transvestitism around 1915 in Berlin (from Latin trans- across, over and vestere to dress or to wear). He used it to describe a group of people who habitually and voluntarily wore clothes of the opposite sex. (The distinction between sex and gender had not been made at this time.) Hirschfeld's group of transvestites consisted of both male and female bodied persons with (physically) heterosexual, (physically) homosexual, bisexual and asexual preferences.
Hirschfeld himself was not particularly happy with the term, since he realised that clothes were only an outward sign of a variety of reasons to wear them. In fact, Hirschfeld helped people to achieve the very first name changes and to get the very first sexual reassignment surgery.Hirschfeld's transvestites therefore were, in today's terms, not only transvestites, but people from all over the transgender spektrum.
Hirschfeld operated very much in a three-gender framework, namely male, female and other or third gender. Included into this third gender were all people who, in today's terms, violated heteronormative rules. Again in today's terms, this is very much equivalent with the queer community, i.e. lesbians, gays, bisexuals and transgendered people. Therefore, there was no pressing reason to find different terms for the different shades of Hirschfeld's transvestitism.
Hirschfeld also noticed that sexual arousal was often, but by no means always associated with transvestite behaviour, and he also clearly distinguished between transvestitism as an expression of a person's "contra-sexual" (transgender) feelings and fetishist behaviour, even if the later involved wearing clothes of the opposite sex.
Today Hirschfeld's use of transvestitism is extinct. Today's meaning of transgender is very much equivalent.

The rise of the Nazis to power and the second world war had brought to an end not only Hirschfeld's work, but also most European research in the field of sexuality. In both Europe and the North America transvestite behaviour (both by male and female bodied persons) was until the 1960s seen an expression of homosexuality or suppressed homosexual impulses. Also, the three-gendered framework of Hirschfeld disappeared, and the two-gendered framework became the frame of reference again. (Until the late 1990s.)

In the 1960s Harry Benjamin (and others) started working with people showing transvestite behaviour again. Trying to press transvestite behaviour into a two-gendered framework produced a very significant result: Transsexualism. Unlike Hirschfeld, who had tried to find a social space where third-gendered people could live the way they needed or wanted, people showing other-gendered behaviour now were forced to find a way of living as "proper men" or "proper women". And if a person could not be "cured" of transvestite behaviour, it seemed the best to make them change sex. (Which of course was a very positive development for many!) Those who refused this "cure" were labeled either homosexuals or sexual fetishists.
Since transsexuals had and sometimes still have to "proof" that they are not "just transvestites" to get access to medical treatment, people who see themselves as transsexuals occasionally discriminate against anything they see as "transvestitism" even more strongly than the public in general.
Today both the association of transvestitism with homosexuality and transvestic fetishism still exist alone and in various combinations.

Social changes brought about the next modifications:
The gay and lesbian rights movement after the Stonewall riots weakened the association with homosexuality very much, since more lesbians and gays became visible, and most of them did not not show transvestite behaviour. The extremely transvestitism that is still associated with the LBG community, which differs quite obviously from most other forms of transvestitism, became known as drag.

That left transvestitism as transvestic fetishism. It has been a standard (and unproven) assumption of most researchers that women do not have fetishistic tendencies. Also, in most parts of western societies it became almost impossible for a women to recognisably cross-dress, because more and more pieces of male clothing were permitted or even fashionable for women. Also the distinctive cross-dressing behaviour of butches in the lesbian community became "politically incorrect" and therefore rather rare. All this led to the term transvestitism being applied to men only, because there seemed to be no need for a word for cross-dressing female bodied persons.
Today transvestitism is still applied mostly to male bodied persons. However, some researchers never stopped using the term transvestitism also for female bodied persons, and recently some groups of female bodied transvestites have started to use the term to describe themselves.

After all those changes which took place during the 1970s, a large group was left without a word to describe themselfes: Cross-dressing male bodied, male identified, gynophilic persons (or heterosexual males). This group was, for obvious reasons, not particularly happy with the term transvestitism. Therefore the term cross-dressing was coined. This group did - and sometimes still does - distance themselves strictly from both gay men and transsexuals, and usually deny any fetishistic intentions, too. It was probably this development that lead to the explicit definition of transvestic fetishism as distinctively different from transvestitism.
However, when this group of people achieved public attention, most of the time not the word cross-dressing was used, but transvestitism. That led, paradoxically, to yet another usage of transsexualism:
Today transsexualism is sometimes used to describe specifically cross-dressing male bodied, male identified, heterosexual persons. Cross-dressing itself can be used to describe any transvestite (or cross-dressing) behaviour except transvestic fetishism.

Conclusion: There are many different usages and meanings of the term transvestitism. Some of them clearly contradict each other; the only thing they have in common is

  • They describe a behavior of people dressing in clothes of a gender that is different from the gender they were assigned (usually at birth) or the gender they are living in. It does imply some inner motive for cross-dressing, but does not specify this motive.
  • They (usually) exclude transvestic fetishism and they do not include transsexualism.
The word transvestitism therefore should be explained when used; most of the time using cross-dressing will avoid much potential confusion. If encountered, it is necessary to find out which particular meaning it has in the context in which it is presented.