Transgender individuals experience elevated mental health issues and a diminished quality of life compared to the general population. While gender‐affirming dermatology treatments hold promise in addressing these challenges, there is a notable dearth of research in this area. Therefore, the objective of this study was to provide a comprehensive summary of the existing literature on the psychosocial effects of gender‐affirming dermatology treatments in transgender populations. A systematic review of original research on gender‐affirming dermatology treatments in transgender populations was conducted from PubMed (including Medline), Cochrane Library and Embase following the Preferred Reporting Items for Systematic Reviews and Meta‐Analyses 2020 guidelines. The search was limited to studies published after 1 January 2013 and was conducted on 26 June 2023. Relevant reviews were excluded but had their references screened. All studies that met the inclusion criteria also had their references screened. Article screening involved two steps: initial abstract/title screening using Rayyan.ia, followed by full‐text screening for selected articles. Risk of bias was assessed using Joanna Briggs Institute critical appraisal checklists. Thirteen studies were analyzed and most revealed a positive association between gender‐affirming dermatology treatments and favorable psychosocial outcomes. However, there was a large imbalance in the focus on transfeminine versus transmasculine individuals, alongside disparities in gender identification methods. Hair removal followed by nonsurgical injectables were the primary treatments studied. Most studies faced notable limitations, preventing a definitive causal relationship between gender‐affirming dermatology treatments and psychosocial effects. Across studies, there were discrepancies in the type of psychosocial outcome studied and a lack of standardized assessment tools. Despite these limitations, gender‐affirming dermatology treatments appear to have psychosocial benefits for transgender individuals, but further robust studies are needed for a comprehensive understanding of this relationship.