From the State.gov website. Check there for any revisions or changes.
Gender Reassignment Applicants.

Gender Reassignment Applicants

If you are in the process of or have completed gender reassignment, please note:

The ID you present with your application must accurately reflect your current appearance.
The passport photo you submit with your application must accurately reflect your current appearance.
In order to have the passport issued in your new gender, you must submit a physician certificate with your application that validates whether your gender transition is in process or complete.
Requirements for all elements of the passport application aside from gender still apply, including evidence of legal name change (if applicable).

If a physician certifies that your transition is complete, you are eligible for a full validity ten-year passport. The signed original statement from the attending medical physician must be on office letterhead and include:

Physician’s full name
Medical license or certificate number
Issuing state or other jurisdiction of medical license/certificate
Drug Enforcement Administration (DEA) registration number assigned to the physician
Address and telephone number of the physician
Language stating that he or she is your attending physician and that he or she has a doctor/patient relationship with you
Language stating you have had appropriate clinical treatment for gender transition to the new gender (male or female)
Language stating “I declare under penalty of perjury under the laws of the United States that the forgoing is true and correct”

If a physician certifies that your transition is in process, you are eligible for a limited validity two-year passport. The signed original statement from the attending medical physician must be on office letterhead and include:

Physician’s full name
Medical license or certificate number
Issuing state or other jurisdiction of medical license/certificate

A limited passport book can be extended to the full ten-year validity book with no additional fee by submitting Form DS-5504 within two-years of the passport issue date.

Example Certification from Attending Physician:

(Attending Physician’s Official Letterhead)
I, (physician’s full name), (physician’s medical license or certificate number), (issuing State of medical license/certificate), (DEA Registration number), am the attending physician of (name of patient), with whom I have a doctor/patient relationship.
(Name of patient) has had appropriate clinical treatment for gender transition to the new gender (specify new gender male or female).
Or
(Name of patient) is in the process of gender transition to the new gender (specify new gender male or female).
I declare under penalty of perjury under the laws of the United States that the forgoing is true and correct.
Signature of Physician

Typed Name of Physician
Date