Donald Trump's government has revoked guidance to US public schools that allowed transgender students to use toilets matching their gender identity.
The guidance, issued by his predecessor Barack Obama, had been hailed by as a victory for transgender rights.
But critics said it threatened other students' privacy and safety, and should be decided at state level.
Mr Obama's directive had sparked a backlash across the country, with legal challenges from 13 states.
The latest change will have no immediate impact, because Mr Obama's directive has already been temporarily blocked by a judge in Texas since August.
On Wednesday, the Trump administration sent a letter to US schools outlining the change, saying the previous measure had caused confusion.
It had also sparked lawsuits and debate over how it should work in practice, the letter from the Justice and Education departments said.
Last May, Mr Obama's justice and education departments instructed public schools to allow transgender students to use whichever bathroom corresponded to their gender identity.
Though not legally binding, Mr Obama's order warned schools they could lose funding if they did not follow the new guidance.
The Obama administration's guidance was based on its interpretation of Title IX, the federal law that prohibits sex discrimination in education.
Mr Obama argued that protection extended to gender identity.
During his presidential campaign, Mr Trump said transgender students should be allowed to use whichever bathroom "they feel is appropriate".
But he reversed his stance after facing Republican criticism.
On Wednesday, conservative activists praised Mr Trump's order, saying it protected student rights to privacy.
"Our daughters should never be forced to share private, intimate spaces with male classmates, even if those young men are struggling with these issues," said Vicki Wilson, a member of Students and Parents for Privacy.
"It violates their right to privacy and harms their dignity."
Texas Attorney General Ken Paxton, a Republican, also praised the move.
"Our fight over the bathroom directive has always been about former President Obama's attempt to bypass Congress and rewrite the laws to fit his political agenda for radical social change," he said.
However, transgender activists have argued that gender identity is a civil rights issue that should be enforced at a federal level, not left to individual states.
American Federation of Teachers President Randi Weingarten called the move a major setback for trans rights.
"By rescinding these protections, the Trump administration is compromising the safety and security of some of our most vulnerable children," she said.
"Reversing this guidance tells trans kids that it's OK with the Trump administration and the Department of Education for them to be abused and harassed at school for being trans."
Some celebrities also criticised the decision on social media, with TV presenter Ellen DeGeneres tweeting: "This isn't about politics. It's about human rights."