One of my close friends has recently told me that he thinks he is "transgendered." A counselor he is seeing told him that this disorder is not unusual and that he should consider sex-change surgery. Please help me as I have no idea what Islam says about sex change. Can you also suggest some further readings on this subject? Is it possible that Allah created him a female in a male body (as he claims)? And if so, why would the Almighty do that?

Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.

We advise the said person to visit a reliable medical center or trustworthy doctor to carry out the necessary medical checks for him. So, if results indicate that his reproductive system is natural, it becomes Haram for him to be undergone to any sex-change surgery, since this constitutes a form of change in the divine creation. Then, we advise you to resort to physical therapy or treatment by al-Ruqiah al-Shar'iah (Qur'anic recitations and Prophetic supplications). But, if results of medical test shows that you have a female reproductive system, then there is no harm in carrying out change surgery. And in both cases, we remind you to fear Allah, be patient and to seek refuge in Allah from the devil and his wiles.
In addition, it is possible - by Allah's power and Mighty - that He creates some of His creatures who lack specified male or female system but rather are bisexual beings. Here, it is our duty to avoid asking why, since He is the Creator and Lord Who is not to be asked about His creation. Allah says: {And your Lord creates whatsoever He wills and chooses, ………} [28:68]
However, such a creation might be to demonstrate His Majesty and power, or the weakness of mankind, or even a form of trial and so on.
Allah knows best.