Under an amendment to the Sharia Criminal Offences Enactment, in force since Dec 1, any Muslim caught dressed as the opposite sex faces up to one year in jail and a possible fine of 1,000 ringgit (10,000 baht), the Harian Metro daily reported.
"Before, we could only arrest them and advise them to change, but this has not brought any results," Pahang state Islamic Religious Council Deputy President Wan Wahid Wan Hassan was quoted as saying. "Instead the phenomenon has become widespread.''
"After this, a jail term or a fine or both can be imposed if they are convicted,'' he said.
The law only applies to Muslims in Pahang state, where a degree of sharia law is applied by local authorities.
The law was part of a major review of the sharia enactment, that also included new sections on defiance of the sultan and religious agencies, according to the official news agency Bernama.
Islamic authorities have decreed a national fatwa, or prohibition, ruling masculine dress on women to be forbidden, but there is no national law to this effect.
Pang Khee Teik, a prominent local gay activist, was unhappy with the state ruling.
"Leave the Mak Nyahs (transvestites) and pengkids (tomboys) alone," he wrote on Facebook. "This is Malaysia where unkindness is law, where we kick those who are already down,'' he said.