On Wednesday, conservative activists praised Mr Trump's order, saying it protected student rights to privacy.
"Our daughters should never be forced to share private, intimate spaces with male classmates, even if those young men are struggling with these issues," said Vicki Wilson, a member of Students and Parents for Privacy.
"It violates their right to privacy and harms their dignity."
Texas Attorney General Ken Paxton, a Republican, also praised the move.
"Our fight over the bathroom directive has always been about former President Obama's attempt to bypass Congress and rewrite the laws to fit his political agenda for radical social change," he said.
However, transgender activists have argued that gender identity is a civil rights issue that should be enforced at a federal level, not left to individual states.
American Federation of Teachers President Randi Weingarten called the move a major setback for trans rights.
"By rescinding these protections, the Trump administration is compromising the safety and security of some of our most vulnerable children," she said.
"Reversing this guidance tells trans kids that it's OK with the Trump administration and the Department of Education for them to be abused and harassed at school for being trans."
Some celebrities also criticised the decision on social media, with TV presenter Ellen DeGenere tweeting: "This isn't about politics. It's about human rights."