The inmate reportedly raped at a privately run men's prison in South Auckland is transgender.
A family spokesperson confirmed to the Herald on Sunday the inmate was taking hormone pills to become a woman.
The transgender community says the inmate is not getting enough support after the incident which is alleged to have happened at the privately-run Wiri prison in South Auckland on Friday morning.
The inmate - described by family as having a "gentle disposition" - is being treated at a prison health unit.
Police and Corrections investigations are underway into the allegations.
Lynda Whitehead, president of transgender support group Agender New Zealand, said transgender inmates needed better protection.
"They are terribly vulnerable, especially when a male is transitioning to be female," Whitehead said.
"They are a standout target...Putting a transgender person in a cell with a male thug is asking for trouble - they might as well have put a woman in there."
The Department of Corrections last month shifted transgender prisoner Jade Follett from Wellington's Rimutaka Prison to a women's facility.
Whitehead said this is something which should be considered in more cases.
"If someone is having hormone treatment then Corrections is well aware of their situation and they should at least be segregated from the mainstream, or moved to a female facility.
"Corrections needs to urgently rethink how transgender people are treated before someone is killed or subjected to further serious assaults."
A police investigation is underway into claims the prisoner was repeatedly raped by a cellmate while locked in overnight.
A family member said the inmate rang on Wednesday scared about being put in with mainstream prisoners. Until then, the inmate had mostly been in segregation.
In a phone call home today the prisoner told family they were being well cared for in the medical ward, and was receiving special meals. The inmate's family will visit tomorrow.
Labour's acting Corrections spokesperson Jacinda Ardern believed the alleged rape was further evidence private contractor Serco should not be running the country's prisons.
She said because the inmate was transgender this added "another layer" to already inadequate levels support for vulnerable prisoners.
"It's there in black and white in Serco's contract that they have to run proper segregation policies at Wiri to keep at-risk prisoners safe. They clearly aren't living up to that."
Police and Corrections are investigating.
Corrections said the department could not comment further but stressed there was a "zero tolerance" for antisocial behaviour "including sexual assaults".