People in the Cardiff and Vale area seeking hormones for gender identity treatment can get prescriptions from a specialist GP locally from September.
Groups representing transgender people say they have suffered delays in getting the drugs even after referral to a specialist London clinic.
They claimed their mental health and wellbeing was being badly affected.
But Wales Equality Alliance is worried patients elsewhere in Wales will still face long waits for treatment.
Health Secretary Vaughan Gething also said the Welsh Gender Team, who will access patients who want to begin treatment, will start seeing patients in October.
At present all Welsh transgender patients are referred to London.
The Welsh Government said it was offering access to hormone treatment in Cardiff and the Vale of Glamorgan because most patients waiting for the drugs live in that area.
The Wales Equality Alliance has welcomed the announcement and is "pleased Wales is taking ownership of trans care."
But the group has expressed concern that patients living outside Cardiff and the Vale will face waits for testosterone and oestrogen treatment.
Jenny Marie Charles, from the Alliance, said: "We know that between 80 and 100 people have been assessed in London and have been recommended for treatment but are having difficulty getting their prescriptions.
"We know there are at least 400 people waiting to be assessed and the number is growing."
She said it was vital that trans people were assessed and treated quickly as the alliance are worried that some patients buy drugs online "because they feel they have no other choice".
Mr Gething said the Welsh Gender Team - whose creation was promised in August 2017 - would start seeing patients at the end of October.
"Today's announcement is a positive step towards the fully integrated service I expect to be in place next year," he said.
"A specialist team in Wales will reduce both the distance of travel and, over time, the waiting times people in Wales currently experience."
Despite this development, it is understood that Welsh patients will still need to travel to hospitals in England if they want surgery.
'Upset but not surprised'
Ben Marriott was assigned female at birth. The 32-year-old trans man was seen by the London clinic and has had surgery at a hospital in Hull, but he has experienced difficulties getting his hormone treatment from a Cardiff GP.
"I was very upset but not entirely surprised," he said.
"A lot of my friends have had difficulty getting the treatment from GPs even though they had the green light that this was the correct treatment from the London gender clinic."
"A lot of it, I think, is unconscious prejudice - I think people see hormones for trans people as a choice rather than a necessity.
"I consider that I have a testosterone deficiency because I don't produce my own testosterone."
'Fight for their rights'
Ms Charles said trans people waiting for their health boards to give them the necessary medicine is having a major impact on their health and wellbeing.
"The situation for a lot of people has deteriorated, people are suffering from depression," she said.
"They're being recommended for treatment by the clinic, but so many people are facing long waits. They are still having to fight for their rights, "
The Welsh Government said work was continuing with health boards and the General Practitioners' Committee to develop a fully integrated gender identity service in Wales.
Cardiff and Vale University Health Board have appointed a lead clinician and service manager for the Wales Gender Identity Clinic, with recruitment underway for the advanced nurse practitioner and other appointments to follow.
Mr Gething added that £500,000 was being invested annually improve gender identity services in Wales due to the increase in demand.
The decision has been applauded by the BMA Wales, which represents doctors.
Its GP committee said all transgender patients "should be treated as close to home as possible".
BMA Wales committee member Dr Nimish Shah added: "Today's announcement is a step in the right direction. The fact that it has taken until now for progress to be made is however, frustrating."