Introduction <p>Research on the role of LGBTQ + policies in the US has primarily examined how policies are associated with perceptions of LGBTQ + communities, LGBTQ + people’s experiences of discrimination, or LGBTQ + mental health. However, no research that we are aware of has examined the indirect effects of distinct LGBTQ + policies on mental health outcomes among sexual minority women and gender diverse individuals assigned female at birth (SMWGD) through sexual orientation discrimination prospectively.</p> Methods <p>We used state level data from the Movement Advancement Project in combination with baseline and follow up data from a sample of 429 SMWGD to understand associations between distinct LGBTQ + policies, anxiety, and depression through sexual orientation discrimination. Participants were recruited online August 2020 through May 2021.</p> Results <p>Only LGBTQ + nondiscrimination policies, and no other policies, were significantly associated with sexual orientation discrimination. Participants living in states with more LGBTQ + nondiscrimination policies experienced less sexual orientation discrimination at baseline, which in turn predicted less anxiety at follow-up (when controlling for anxiety at baseline). Additionally, living in states with better overall LGBTQ + policies and youth policies were associated with significantly less anxiety, but not depression or sexual orientation discrimination.</p> Conclusion <p>Results suggest that LGBTQ + policies in the US have direct and indirect effects on the mental health of SMWGD. However, we must continue to monitor the role of LGBTQ + policies on the lives of LGBTQ + community members.</p> Policy Implications <p>Policymakers should promote nondiscrimination policies and address the real-life impact of LGBTQ + polices in the lives of their LGBTQ + citizens.</p>