It will mean men can attend formal occasions in skirts and stockings and women in suits and bow ties.
The new rules come after a motion by the university's Lesbian, Gay, Bisexual, Trans and Queer society (LGBTQ Soc).
The changes were passed by the student union and will start from next week.
Jess Pumphrey, LGBTQ Soc's executive officer, said the change would make a number of students' exam experience significantly less stressful.
Under the old laws on academic clothing - known as subfusc - male students were required to wear a dark suit and socks, black shoes, a white bow tie and a plain white shirt and collar under their black gowns.
Female students had to wear a dark skirt or trousers, a white blouse, black stockings and shoes and a black ribbon tied in a bow at the neck.
If a transgender student wanted to wear subfusc of the opposite sex they had to seek special dispensation from university proctors, who had the power to punish those who breached the rules.
An Oxford University spokesman said: "The regulations have been amended to remove any reference to gender, in response to concerns raised by Oxford University Student Union that the existing regulations did not serve the interests of transgender students."
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