Background: Mental health issues and quality of life are among the important items of the general health in all people, and especially in transgender people. The present study aimed to assess the quality of life, depression, anxiety, and stress in transgender women and determine the factors contributing to them. Methods: A cross-sectional study on 127 Iranian transgender women was performed from August 2019 to April 2020 using a convenience sampling method. The quality of life (QOL) was determined by using the WHO questionnaire (WHOQOL-BREF). The DASS-21 questionnaire was employed to evaluate the anxiety, depression, and stress in the subjects. Results: 48% of the individuals had a moderate QOL. The highest score achieved in the physical health dimension, and the lowest score in the social relationships dimension. Depression, anxiety, and stress were severe and extremely severe in 22%, 20.4%, and 17.3% of the subjects. A significant relationship was observed between the overall perception of QOL and depression, anxiety, and stress (p <0.001).A significant positive association between the subscales of QOL and education and favorable economic status were observed among transgender women. Also, a significant negative correlation existed between the subscales of QOL with age and sexual violence. Regarding mental health, education had a significant relationship with reduced stress and anxiety, and favorable economic status had a significant relationship with reduced depression, while sexual violence was associated with increased stress in the individuals.Conclusion: The study results show that change in some modifiable variables such as education can improve transgender women’s quality of life and mental health by improving economic status. Moreover, there is also a strong need for developing sexual violence prevention services regarding its considerable effects on mental health and quality of life.