Photoacoustic computed tomography (PACT) is an emerging computed imaging modality that exploits optical contrast and ultrasonic detection principles to form images of the photoacoustically induced initial pressure distribution within tissue. The PACT reconstruction problem corresponds to a time-domain inverse source problem, where the initial pressure distribution is recovered from the measurements recorded on an aperture outside the support of the source. A major challenge in transcranial PACT brain imaging is to compensate for aberrations in the measured data due to the propagation of the photoacoustic wavefields through the skull. To properly account for these effects, a wave equation-based inversion method should be employed that can model the heterogeneous elastic properties of the medium. In this study, an iterative image reconstruction method for 3D transcranial PACT is developed based on the elastic wave equation. To accomplish this, a forward model based on a finite-difference time-domain discretization of the elastic wave equation is established. Subsequently, gradient-based methods are employed for computing penalized least squares estimates of the initial source distribution that produced the measured photoacoustic data. The developed reconstruction algorithm is validated and investigated through computer-simulation studies.