Transgender: exhibiting the appearance and behavioral characteristics of the opposite sex
Transsexual: a person who psychologically identifies with the opposite sex and may seek to live as a member of this sex especially by undergoing surgery and hormone therapy to obtain the necessary physical appearance (as by changing the external sex organs)
Transgender: People who were assigned a gender at birth, based on their genitals, but who feel that this is a false or incomplete description of themselves.
Transsexual: One who wishes to be considered by society as a member of the opposite sex. (may be pre- post- or non-operative, but that's the person's own business and in any case they wish to be referred to by the gender they display/declare).
Transsexual is thus (in my understanding, and in several references I've seen) a subset of transgender. But definitely somone who cares enough about the social recognition of their own gender to claim a specific gender publicly and usually to change their appearance to make that more obvious. I find it surprising that the Merriam Webster definition of Transgender is external, when it seems very internal to me. Transvestitism would be the practice of taking on the external characteristics of the opposite sex without any change in personal gender identification. Perhaps. :P
How do you define the terms? How are the differences between them significant to you? or not?
Sexuality.org Transgender Terminology