A pilot at Prince William's RAF base is transitioning to become a woman.
Flight Lieutenant Ayla Holdom, 29, who was born male, told friends this week that she expects to complete her transition within a year.
She is based at RAF Valley in Anglesey, North Wales, where the second-in-line to the throne is training.
The Sun reports that Ms Holdom will remain with her wife Wren and continue in her job, becoming one of three women in 22 Squadron C Flight.
A Ministry of Defence spokesman said: "This is no big deal for the RAF, or the services in general for that matter, whether you are talking about transgender or homosexuality.
"All we have to deal with is can that person do the job, can Ian [her former name] fly as a co-pilot in the search and rescue?"
According to the newspaper, the pilot sent an email to friends and family this week explaining the change.
Ms Holdom also updated her Facebook to say she would shortly delete the profile to "move on" and encouraged friends to ask if they did not understand.
A source said: "It wasn't a total shock for those of us who have known Ian for a while, as he was not happy being a man.
"This sort of thing isn't that unusual in this day and age, even in the military."
"He said he wasn't going to start wearing a bonnet and screaming 'I'm a laydee!'
"He made a few other jokes in the message, saying that there would be some big and small physical changes.
"He said he accepted that a lot of people would find his decision 'weird', he recognised there were funny aspects to it, and he said he'd be disappointed if people didn't take the mickey a bit."