The patient used a loophole that covers procedures for people without health insurance to pay for surgery to become a woman last Wednesday.
It is only the second case of publicly-funded gender reassignment since the rule came into effect in 2010.
Social services approved the operation, which costs around $10,000, days before she turned 21, when most children leave the foster care system.
Transgender rights activists have hailed the anonymous woman’s move as ‘inspirational’.
Mariah Lopez, a member of Strategic Transgender Alliance for Radical Reform (STARR), told New York Daily News: ‘What’s happening now is a shift by ACS, in the largest city in the world, influencing health care nationally.’
ACS would not comment on the surgery.
A spokesman said the agency supports ‘the health and well-being of all young people in its care’.
A statement added: ‘ACS reviews all requests for medical treatment on a case-by-case basis, conducting internal reviews as well as consulting medical professionals’ expertise, to ascertain the nature and severity of a medical condition and determine if a procedure will provide a significant benefit to a youth.’
Supporters say the woman was entitled to the treatment as it is more than a cosmetic procedure.