The Transgender Law Center announced the vote late Thursday and praised it as a victory for the LGBT community.
“We’re incredibly proud of the CalPERS Board for taking action to make sure transgender people are treated fairly and have the same access to care as everyone else,” said Masen Davis, the center's executive director, in a statement.
"Today CalPERS joins a growing list of public and private sector entities that have decided the time has come to end exclusionary policies."
Moves to extend healthcare to transgender people are increasingly common in California, which has been on the cutting edge of LGBT policy for decades.
In November, San Francisco announced that it would begin to offer sex-change operations to the uninsured through its universal healthcare program. San Francisco and Portland, Ore., already covered the surgeries for their employees.
According to The Associated Press, the number of major U.S. companies that cover sex-change operations doubled in 2011.