The best answer to me is that there isn’t a cause for crossdressing — there are so many as there are crossdressers! So, a more honest answer would be that there are several causes, a few of which are usually listed in the literature about the subject, to wit:

Reason 1 - Erotic pleasure (transvestic fetishism), either from the clothes themselves, or the act of wearing them.

Reason 2 - Entertainment (e.g. some drag queens; movie/theatre actors and opera singers, etc.)

Reason 3 -Political activism (in the sense of pointing out how gendered clothing is basically silly)

Reason 4 -A tribute to women in general (also claimed by some drag queens)

Reason 5 -Stress relief (seriously!), where male individuals use cross-dressing as a means to ‘escape’ from their duties as a ‘male’ in our gendered society

Reason 6 -‘Getting in touch with one’s inner femaleness’ (such individuals might not claim to be transgender at all, but something more akin to ‘two-spirit’ people, having both a male and female side to them)

Reason 7 -Sheer fun! (Yes, why not??)

Reason 8 -A way for certain homosexual males to attract non-homosexual males for sexual and romantic encounters. This sounds strange, but some homosexual males are not attracted to other homosexual males, but merely to heterosexual males, who might find it easy to have sex with someone who looks like a female (such people may, or may not, actually be transexual; while their partners will always claim to be heterosexual, no matter what)

Reason 9 -A temporary measure used by some transexuals until they are able to legally change their IDs to the female gender (once they become females, of course, then they aren’t crossdressing, but merely dressing according to their new legal gender). Note that some transexuals never crossdress before transition.

But there are uncountable more ‘causes’, and all of them have nothing in common with each other, since their motivation is completely different.

Are they all crossdressers? Yes, you could technically call them that (since ‘crossdressing’ only means ‘wearing clothes socially assigned to a different gender’) although I’m pretty certain that many in the above classifications would totally disagree. 1 and 5–7 would probably self-label themselves as ‘crossdressers’ (even if they would do it for totally different reasons). 8 and 9 would probably refuse the word ‘crossdresser’ to be applied to themselves. 2–4 would agree that they are ‘wearing women’s clothes’ but probably not call themselves ‘crossdressers’.

So, the most correct answer to your question is that there is not a single cause for crossdressing. You will just have to ask each person what their reason is. You will get different answers, as mentioned in the other comments. And because each reason is equally valid to any other, your question is essentially meaningless. It would be the same as asking: ‘why do people think differently?’ or ‘why do some Americans vote Republican?’ ;-)

Sometimes, even what seems to be a good question is actually meaningless.

P.S: I personally feel that the above article answered the major reasons why people crossdress. My reason for dressing is reason 6 and what is yours? Please comment.