How the normal female brain develops
How the normal male brain develops
Brain Developments
All female fetuses start out as femaly embryos. The 'XX' chromosomes order no hormonal washes to occur. The fetus, not touched by testosterone, remains female, both in body and brain.
How the MTF transsexual brain develops
All males start out as female embryos. However, somewhere between the 8th and 24th week a change to male occurs if the chromosomes are 'XY'. The 'XY' chromosomes cause Testosterone to be produced and released in the fetus body. In the fetal brain this testosterone is converted into a type of estrogen which masculinizes the male brain. These hormonal washes must be precisely timed for this process to be successful.
Like the normal male embryo, the male-to-female Transsexual brain starts out female.. Then between the 8th and 24th weeks, the 'XY' chromosomes introduce testosterone hormonal changes, but the hormonal washes are faulty. They are either insufficient or ill-timed.
When this happens, the fetus develops a male body. However, some of the default (original) female brain processes remain intact. Thus, the brains gender identity remains female. This means that Transsexual males are males whose process of brain masculinization was incomplete. Their default female brains still function. The degree of arrested development can vary. The original brain circuitry that was missed in the masculinizing process provides a continuting feminine influence. This explains why many transsexual biological males know from as early as 3 years old that they are actually members of the opposite sex.
I forgot to mention I found the info at geocities.com/transtudude/brain developments.
There is another site that I liked. It is too long to copy and paste but can be found by googling Carl W. Bushong Phd. I found it very informative.
It's so neat to see science beginning to research more about those who fall out of the traditional gender lines. I think it's very positive that we may someday find out the "why". 
