Following the committee move, transgender will no longer appear on Denmark's definition of mental illnesses as of January 1st, 2017.
“Trans people in Denmark feel stigmatized when they are diagnosed as having a ‘mental disorder',” Social Democrat spokesman Flemming Møller Mortensen told news agency Ritzau.
“We will be the first in the world to remove transgender as a diagnosis. The Health Committee has approved removing transgender from [the Danish Health and Medicines Authority] Sundhedsstyrelsen's list of mental disorders if the World Health Organization hasn't done so by then,” he added.
Amnesty International hailed the move as a major victory.
“This is a huge step – not just for transgender people in Denmark but around the world – that Danish politicians have so clearly approved removing transgender from the list of mental illnesses,” Trine Christensen, Amnesty's general secretary in Denmark, said in a statement.
“This makes Denmark a pioneer country for transgender rights,” she added.
Rights group LGBT Denmark also welcomed the move.
"To remove transgender from the section of mental disorders means removing an institutionalised stigmatisation of trans people," spokeswoman Linda Thor Pedersen said.
The move is intended to put pressure on the WHO, which has yet to remove transsexualism from its list of mental disorders.
Denmark has "no more patience" with the WHO, which will discuss the issue later this year, Mortensen told AFP.