The victim has been identified as Myles Mclean, who is also known to friends as Lashai Mclean.
The motive is still under investigation, but detectives are looking into the possibility Mclean was the victim of a hate crime.
Mclean was on Dix Street with another transgender person at around 4:30 Wednesday morning when police say words were exchanged with two men.
A pistol was pulled. Shots were fired and Mclean was hit in the back.
Officers do not yet know if the killing was motivated by transphobia.
D.C. Mayor Vincent Gray says the investigation is continuing and no motive has been determined. But he said bias based on sexual orientation or gender identity cannot be tolerated.
Community organizers are planning a candlelight vigil at the corner of 61st and Dix Streets NE for Saturday, July 23, at 7 p.m., in memory of Mclean.