It is estimated that over 134,000 American veterans identify as transgender and over 15,000 transgender people are serving in the US military today. As such, the prevalence rates of transgender individuals seeking services at Veterans Health Administration (VHA) facilities have increased and are expected to further increase in the years to come. Historically, transgender veterans have been diagnosed with posttraumatic stress disorder (PTSD) at higher rates in comparison to their cisgender veteran counterparts. This article summarizes what is known about PTSD in gender-diverse veterans and proposes a theoretical model to describe how bio-sociocultural factors in this population may interact to increase the risk of developing PTSD. This article will attempt to identify how these risk factors not only influence the development of PTSD but also impact the severity of posttraumatic symptomology. Consolidating the current academic knowledge for this marginalized population regarding the development of PTSD will also likely aid healthcare providers in making culturally appropriate treatment modifications. Finally, the authors of this article propose a theoretical model to describe how bio-sociocultural factors may interact to increase PTSD risk in gender-diverse veterans.