Transgender and gender diverse (TGD) children and adolescents are an increasingly visible yet highly stigmatized group. These youth experience more psychological distress than not only their cisgender, heterosexual peers but also their cisgender, sexual minority peers. In this review, we document these mental health disparities and discuss potential explanations for them using a minority stress framework. We also discuss factors that may increase and decrease TGD youth's vulnerability to psychological distress. Further, we review interventions, including gender-affirming medical care, that may improve mental health in TGD youth. We conclude by discussing limitations of current research and suggestions for the future. Expected final online publication date for the Annual Review of Clinical Psychology, Volume 19 is May 2023. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.