One of the most prominent debates over minority participation in the military has been whether or not inclusive policies would undermine operational effectiveness. While the adoption of inclusive policy has tended to indicate that minority participation does not compromise effectiveness, the question has not yet been tested in the context of transgender military service. In this paper, we conduct the first-ever assessment of whether policies that allow transgender troops to serve openly have undermined effectiveness, and we ask this question in the context of the Canadian Forces (CF), which lifted its transgender ban in 1992 and then adopted more explicitly inclusive policy in 2010 and 2012. Although transgender military service in Canada poses a particularly hard test for the proposition that minority inclusion does not undermine organizational performance, our finding is that despite ongoing prejudice and incomplete policy formulation and implementation, allowing transgender personnel to serve openly has not harmed the CF's effectiveness.