Purpose: Previous research indicates elevated risk for psychological distress in sexual and gender minority populations, and some research suggests that stigma contributes to elevated psychological distress among members of these groups. This study examined the hypothesis that exposure to transgender-related stigma (TRS) is associated with both higher levels of depression and anxiety among transgender women. Methods: We analyzed data from a diverse sample of 191 adult transgender women living or working in the San Francisco Bay area who were recruited using purposive sampling methods to participate in a cross-sectional survey, which included measures of stigmatization, depression, and anxiety. Results: Higher levels of exposure to TRS were independently associated with higher levels of depression (b = 0.31, P < .001) and anxiety (b = 39, P < .001), adjusting for self-reported health and sociodemographic covariates. Associations between stigmatization, depression, and anxiety were not moderated by participants' age or race/ethnicity. Conclusion: Findings suggest a need for counseling interventions to address the role of stigmatization as a factor potentially contributing to psychological distress among transgender women. This research further highlights the need to develop a stronger evidence base on effective counseling approaches to improve the mental health of transgender women.