Sexual and gender minority (SGM)-identifying adolescents are particularly vulnerable to negative psychological outcomes, including engagement in nonsuicidal self-injury (NSSI). However, little is known about why these relationships exist. We used experimental methods to test the psychological mediation framework in an online sample of 328 adolescents who reported female sex at birth and a range of sexual and gender identities. Participants reported on depressive symptoms, self-criticism (both self-report and implicit), NSSI, and discrimination. They also completed a discrimination-based mood induction to test emotional reactivity. At baseline, SGM participants reported higher levels of implicit and self-reported self-criticism, depressive symptoms, discrimination, and higher rates of NSSI compared with cisgender, heterosexual participants (ps < .03). Following the discrimination induction, SGM-identifying participants exhibited larger emotional reactivity compared with cisgender heterosexual participants, as measured by change in negative mood, F(1, 326) = 7.33, p = .01, ηp2 = .02, and state self-criticism, F(1, 326) = 4.67, p = .03, ηp2 = .014, but not implicit affect toward the self. This effect was associated with baseline depressive symptoms, self-criticism, NSSI history, and discrimination. Post hoc analyses revealed that participants who tended to reframe experiences of discrimination as opportunities for growth exhibited attenuated emotional reactivity to the induction; findings remained significant after adjusting for SGM status and event severity (ps < .001). Results indicate that adolescents identifying as SGM may experience elevated psychological distress compared with their cisgender heterosexual peers and that stigma-related stressors may increase emotion dysregulation and maladaptive cognitive styles, paralleling previously proposed psychological mediation models. (PsycInfo Database Record (c) 2022 APA, all rights reserved).