Jenna Talackova created a splash at the Miss Universe Canada pageant earlier this year when contest organizers disqualified her for being born male.
She waged a legal battle and was eventually allowed to compete, but failed to make the final five on May 19.
The 23-year-old model from Vancouver is one of three people named as grand marshal in Vancouver's Pride parade, which takes place Aug. 5.
However, an outspoken local activist for gay and lesbian rights, Jamie Lee Hamilton, says Talackova doesn't really deserve the honour, despite the Miss Universe headlines.
"Good for her for doing that after she was outed," she said. "I respect her for that, but really she was entering a beauty contest that has never done anything for the gay, lesbian and transgendered community."
Hamilton says activists who have worked with the AIDS movement or pushed for medical coverage for transgender surgery are more deserving of the role.
Talackova was born Walter Talackova and underwent a sex change operation four years ago.