Sexual and gender minority (SGM) people experience unique minority stressors that have a direct and indirect impact on their mental health. While research has often examined cisheterosexist discrimination as a distal (i.e., external) minority stressor and its direct impacts on mental health, little has explored how structural inequity within the lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community may function as a deleterious distal stressor for SGM people. Utilizing a diverse sample of SGM people (N = 618), the present study examined if LGBTQ+ community inequity functioned as a distal stressor similar to cisheterosexist discrimination in directly influencing depression and anxiety, as well as indirectly through proximal stress (i.e., internalized minority stress). Results suggest that LGBTQ+ community inequity was directly associated with depression; however, this direct effect was no longer significant when accounting for covariates (i.e., gender, sexual, and ethnoracial identity). LGBTQ+ community inequity also demonstrated indirect effects through internalized minority stress in effecting depression and anxiety even after accounting for covariates. Lastly, post hoc analyses suggest that the effects of LGBTQ+ community inequity on mental health were over-and-above experiences of cisheterosexist discrimination. Our results provide opportunities for the expansion of minority stress theory to heavily consider distal stressors, such as experiences of structural inequity occurring within the LGBTQ+ community, to capture the multitude of stressors SGM people experience. Implications for clinical practice and community outreach are discussed.