The 81-year-old - who hit headlines this week after officiating a gay marriage at her book signing in New York - made the shocking claim during an impromptu interview with a journalist yesterday.
When asked if she tht the US might get their first gay or female president in the future, she replied: "We already have that with Obama. You know Michelle is a trans.
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Making sure he heard right, the journalist asked: "I'm sorry, she's a what? “A transgender. We all know,” Rivers said as she walked toward a building. She went on to explain that the joke was made in reference to her fashionable dress sense.
“I thought it was a funny complimentary joke when she first came (to the White House).
“I think it’s an adorable joke… I thought it was a compliment!”
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