Aidan, 16, who was born female, claims he was effectively excluded because Hereford Cathedral School refused to let him wear a boy's uniform.
This was despite the support of his mother and the family's GP as he began his transition.
The action is being taken under the 2010 Equality Act. The school said it would defend its position.
Aidan said that when he came out as a boy his mother was "definitely heartbroken".
"I feel like she had dreams of seeing her daughter getting married and having children," he said. "She definitely needed time to mourn and I needed to let her have that time."
Source: Department for Education, The Equality Act 2010 and schools
When he told the school he did not want to be addressed as a girl or wear girl's clothes, he claims staff said it was a "phase" that he would grow out of.
He said he was told he was "attention seeking". "They didn't really take it seriously," he added.
Mother Jackie described the school's treatment as "appalling".
"They made my child out to be a freak and someone who would contaminate other students," she claimed.
A letter from Aidan's mother to the school's chair of governors says she had no choice but to remove her son from the school after being told the school was "inadequately prepared to accommodate Aidan's needs and give him the high level of support and pastoral care that he deserves".
The legal action is currently ongoing through the courts.
It is understood part of the school's defence claims Aidan was withdrawn from the school by his family, prior to a final decision being made by them about whether his needs could be met.
In a statement Hereford Cathedral School said: "The continued happiness, wellbeing and safety of our pupils is the top priority.
"The family's grievances against the school are the subject of current legal proceedings. For that reason the school is unable to discuss any details relating to this matter at the present time, other than to state that it will defend its position in the proceedings."
Note: The family wished to remain anonymous so names have been changed.

The plant in Lincolnshire will burn straw grown within a 50-mile radius and release only the carbon dioxide that the wheat absorbed from the air.
The six-week "hot commissioning" process for the Sleaford Renewable Energy Plant began this week.
This involves firing the boiler and releasing high pressure steam, which cleans the newly-built plant system.
The plant is currently burning gas oil, but straw is due to be added next week.
David Fisher, director of projects at Eco2, which is constructing the plant, said: "Today is a milestone. It's the first firing of the boiler.
"In terms of the construction process we are a little way ahead of the original project programme so it's all going very well so far."
He said he was confident that the plant would go into production in January or February.
As well as feeding electricity into the National Grid, the plant will provide free heat to public buildings in Sleaford town centre, including the swimming pool and the council offices.
Ash produced by the plant will be recycled as crop fertiliser.
The location was chosen because it is in a concentrated region of straw production, which will reduce transportation costs.
Some people living nearby have opposed the power station, saying it will be an eyesore and lorries bringing straw will clog the roads.
However, planning permission was granted in 2008.
A transgender teenager is taking legal action against his former school for discrimination.
[NEXT_CONCEPT]
A straw-fired power station described as "virtually carbon neutral" has been fired for the first time.