The agreement, which also includes an educational component, is aimed at protecting young transgender players from discrimination and harassment.
Jesse Thompson, 17, of Oshawa, Ont., who filed the complaint in August last year, said he was pleased with the result.
"I just hope that kids can see this and know that they don't have to hide any more," Thompson told The Canadian Press.
"They can come out and play their sport that they love, and they don't have to stop playing it just because of how they are or who they are."
The new policy, which applies to all minor players in Ontario under the auspices of Hockey Canada, also calls for the organization to educate its trainers and coaches on discrimination and harassment as well as on gender identity and expression.
In addition, players are entitled to be addressed by their preferred name, as well as by the pronoun that corresponds to their self-identified gender.
For Thompson, an avid hockey player now in Grade 12, the issue became acute about four or five years ago when he hit puberty.
"I'm just a boy. I'm just like any other kid out there growing up. I'm just a teenager," he said.
"(But) once you get to a certain age, you are forced off into a different room, or basically a closet — sometimes they didn't even have change rooms for girls."
Thompson's mother, Ailsa Thompson, said it was "very upsetting" when a coach booted her son from the boys dressing room on the basis that "she's a girl."
Other parents could also show a lack of understanding, she said.
"Parents would come in and kick Jesse out of the girls change room because it was for girls only."
Hockey Canada refused to discuss the settlement but gender rights activists both inside and outside the sports world applauded.
Patrick Burke, co-founder of You Can Play, said he was grateful to Hockey Canada for agreeing to the changes and expressed admiration for Thompson.
"His courage will allow transgender hockey players to feel welcome and supported in their locker rooms," Burke said in a statement. "Hockey is a game meant for everyone and we are excited for the day when all LGBT athletes feel secure in their ability to live their lives openly."
Barbara Hall, chief commissioner of the Ontario Human Rights Commission, called the change "another great milestone."
Hockey Canada has also agreed to provide information about its amended policy to everyone involved with the organization and to post its new dressing room policy on its Ontario websites.
"I hope other hockey organizations around the world can see there's a big change coming," Thompson said. "It needs to be open to everyone to play, to feel comfortable, and to not feel like they're going to be discriminated against."
Lawyer Brenda Culbert, with the Human Rights Legal Support Centre, praised Hockey Canada for sending a strong message of inclusiveness that should resonate with communities across the country.Suggest a correction