Doctors said they could give Danni drugs to postpone puberty as well as hormone treatments, before NHS gender realignment surgery at 18.
Mrs McFadyen said it was a relief to get a diagnosis. "We were worried he would be bullied at school," she told Mail Online.
"But in the end we agreed to let Daniel be who he wanted to be. Our fears weren't enough to stop him being a girl, if that's what he wanted."
Now Danni, six, has long hair, wears girls' clothes and claims to have a girl's head and a boy's body.
Mrs McFadyen, who has four other children, wants to raise awareness of gender dysphoria by telling Danni's story to help parents in a similar situation.
She has set up a Facebook page, My Transgender Child, to encourage parents to share experiences.
She added: "It took me a long time to come to terms with losing Daniel. But my daughter is so happy now."
READ MORE: HOW MY DAUGHTER BECAME MY SON
- Daily Mail