Jamie Lee Hamilton said interviews with two board members of the Non-Partisan Association party about being a candidate in November's municipal elections focused on her sex life.
Hamilton said the interviews made her very uncomfortable.
"I felt that my whole lifestyle was being interrogated ... that I was somehow immoral," she said.
Hamilton said the board members invited her to a café to discuss an ad she had placed on ShemaleCanada.com, an online meeting place for transsexuals.
She had described herself as a "cougar" in the ad, and she declared on her candidate's form that she had worked in the sex trade.
"This is 40 years after [former prime minister] Pierre Trudeau said the state has no place in the bedrooms of the nation," Hamilton said. "Forty years after this we're still having to deal with this? This is unacceptable."
NPA mayoral candidate Peter Ladner said he could not comment on the issue as he was not part of the board's decision.
Hamilton, known for her work on behalf of sex-workers living in Vancouver's Downtown Eastside has run for a variety of political positions, from MP for the Green Party to city councillor, CBC News reports. When announcing her candidacy for Vancouver city council in 2005, she held a news conference dressed in a robe and tiara, calling herself Queen of Hearts. This year, she has styled herself as Queen of the Parks.
She readily admits her high-profile antics have provided plenty of publicity for her activism. In 1998, she dumped 68 pairs of stiletto-heeled shoes on the steps of city hall to highlight the cases of women who went missing from Vancouver's Downtown Eastside.
When she took on federal bawdy house laws, Hamilton opened Grandma's House, a not-for-profit organization that offered condoms, showers, food and other services to sex-workers. For a fee, the sex workers could also make use of a room to see their clients.
She was arrested and charged with running a bawdy house and had hoped to take the case all the way to the Supreme Court, but the charges were later dropped.
"To be denied a place at the table based on my gender identity and my sexual orientation is absolutely deplorable," Hamilton said of the NPA board's decision.
She said she now questions whether the civic party is as tolerant and inclusive as it claims to be and questions whether the party has the "moral authority" to govern Vancouver.
She said she has long advocated for change for the downtrodden of Vancouver's poverty-stricken Downtown Eastside and lobbied for the rights of the gay, lesbian and transsexual community, as well as sex-trade workers.
"All of these issues take legislative change — to enact fairness and justice for people," she said.