Purpose: This study examined the utilization of gender-affirming health care by active-duty service members during the initial 5½ years that transgender and gender-diverse (TGD) individuals were authorized to serve in the U.S. military. The aim of this study was to inform policy discussions regarding inclusion of TGD individuals in the military. Methods: We conducted a retrospective cohort study using administrative health care data from the Military Data Repository (MDR). We assessed the association of demographic factors with the utilization of gender-affirming medical and surgical care. We calculated the incidence rate of initial TGD-related encounters and new prescriptions for gender-affirming hormones among Defense Department Service members between July 2016 and December 2021. Results: We identified 2481 service members with an initial health care encounter with an associated TGD-related diagnosis. More than half (53%) of these service members started gender-affirming hormones, and 14% underwent gender-affirming surgery. Mastectomies and hysterectomies accounted for more than 70% of surgeries. Service members made 3.22 initial encounters with a TGD-related diagnosis per 10,000 service members per year, with an overrepresentation of service members who were designated female in the MDR (8.62), junior enlisted (4.98), and young (4.64). Individuals designated female in the MRD comprised 17% of all service members but accounted for 46% of initial encounters, 51% of new prescriptions, and 73% of surgeries. Conclusion: The study revealed a higher-than-expected number of service members seeking gender-affirming care, particularly among service members designated female in the MDR. Military Health System clinicians provided most of this care, which may mitigate the cost of delivering this essential medical care.