Less commonly she male or she-male, n., pej.
Pornography industry and prostitution slang for pre-operative male to female transsexual. This refers specifically to a person who is biologically male with a female gender expression and has both breasts and a penis.
The term shemale is strictly slang and considered offensive by the people it refers to.
Origins uncertain. A related expression is chicks with dicks.
Sources:
Michael Alexander, http://ftmichael.tripod.com/
Nodeshell rescue