ImportanceTransgender and gender-diverse (TGD) children and adolescents may experience not only gender dysphoria but also depression and anxiety, all of which are likely to be associated with reduced quality of life (QOL). Despite this, little is known about QOL in this population.ObjectivesTo identify demographic, social, and clinical characteristics associated with reduced QOL in TGD children and adolescents; compare their QOL with age-matched population-based norms and that of young people with common mental health problems; and evaluate the association between gender dysphoria and QOL.Design, Setting, and ParticipantsIn this cohort study, baseline data were derived from questionnaires completed in a prospective cohort study (Trans20) of TGD children aged 6 to 12 years and adolescents aged 13 to 17 years first seen at the Royal Children’s Hospital Gender Service (Melbourne, Australia) between February 2017 and February 2020.Main Outcomes and MeasuresThe main outcome was QOL, measured using the Child Health Utility 9D instrument (CHU-9D). Data collection included demographic information, social factors (eg, bullying, lack of support, and social transition), and clinical characteristics (eg, gender identity, gender dysphoria, and mental health difficulties). Population norms and CHU-9D data for Australian youths with mental health diagnoses were derived from published literature.ResultsThe TGD cohort comprised 525 children and adolescents aged 6 to 17 years (median age, 14 years [IQR, 12-16 years]; 364 [69.33%] presumed female at birth). The mean (SD) CHU-9D score was 0.46 (0.26). Compared with population norms, TGD children (0.58 [0.27] vs 0.81 [0.16]; P < .001) and adolescents (0.41 [0.25] vs 0.80 [0.14]; P < .001) had significantly lower scores. Within the TGD cohort, mean (SD) scores were significantly lower in adolescents (0.41 [0.24] vs 0.62 [0.25]; P < .001), those assigned female at birth (0.43 [0.26] vs 0.55 [0.25]; P < .001), those reporting mental health problems (0.37 [0.23] vs 0.57 [0.25]; P < .001) and physical health problems (0.41 [0.26] vs 0.48 [0.26]; P = .04), and those who were bullied (0.38 [0.24] vs 0.52 [0.25]; P < .001). Gender dysphoria alone was associated with a lower mean (SD) CHU-9D score (0.51 [0.23]) than that in control adolescents with serious mental health conditions such as depression (0.64 [0.26]) and anxiety (0.70 [0.24]) and was an independent factor associated with QOL.Conclusions and RelevanceIn this cohort study of TGD children and adolescents in Australia, QOL was worse in this population than in age-matched, population-based peers. Quality of life associated with gender dysphoria was substantially worse than that seen in young people with common mental health conditions. These findings emphasize the risk of poor QOL among TGD young people and the need to better support them.