North Aceh police chief Ahmad Untung Surianata and several of his subordinates have been questioned by the police internal affairs unit following raids on beauticians' premises in which 12 transgender staff were detained.
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Officers were said to have forcibly cut the hair of some of them and made them wear male clothing and speak in a masculine voice.
Surianata said at the time that mothers had complained the transgender people were teasing their sons.
"The investigation is still ongoing," Aceh police spokesman Misbahul Munauwar told AFP. "If proven guilty of violating police conduct (rules), they may face disciplinary sanctions."
Sanctions range from a written reprimand to suspension.
The investigation into the raids sparked an angry protest last Friday amid rising anti-LGBT sentiment in the province.
Prejudice against gay and transgender people has long been widespread in Indonesia, which has the world's largest Muslim population. Parliament is set to pass a long-dormant bill to make sex outside marriage, including gay relations, illegal.
The discrimination is particularly acute in Aceh on Sumatra island, the only province to be ruled by Islamic law since it was granted special autonomy in 2001.
More than 100 people -- including Aceh governor Irwandi Yusuf and a lawmaker -? took to the streets in the provincial capital Banda Aceh last Friday in a show of support for Surianata.
Some beauty shops who employed transgenders have closed down while many beauticians were considering fleeing the province.
"The current situation is very uncomfortable to us. We are now in fear," a 33-year-old long-haired transgender, who requested anonymity, told AFP Saturday at her beauty shop.
"At the moment, I avoid leaving home at night, it's too scary."
Nasir Djamil, the lawmaker who joined the protest on Friday, said: "LGBT is forbidden by Islam. We shall continue efforts to educate them (transgenders) because they are also our brothers."
Pictures showing a Hello Kitty doll being burnt by the protesters went viral but it was unclear why the character was targeted.
"I don't know why they used Hello Kitty. I was only invited to join the rally," Djamil of the Islamic PKS party told AFP.
Last month a Christian was publicly flogged for selling alcohol, making him only the third non-Muslim to suffer a public whipping under Aceh's Islamic law.
Human rights activists condemned the police roads on beauticians.
"The authorities were arbitrarily targeting transgender people simply for who they are, despite them having committed no crime," Amnesty International Indonesia executive director Usman Hamid said in a statement.
"Such a public shaming is in contravention of Indonesia?s international obligations. This must stop immediately."
Gay rights activist Hartoyo, who like many Indonesians goes by one name, said the rising sentiment against LGBT people in Aceh could trigger vigilantism against homosexuals across Indonesia.
"More than half a million transgender women in Indonesia work in the beauty industry and they now also feel threatened," he said.
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