Purpose <p>To prospectively evaluate patient and clinician reported outcomes of sexual function and health-related quality of life (QOL) of transgender women preoperatively (t0), 6 months (t1), and 12 months (t2) after gender-affirming surgery (GAS) with penile inversion vaginoplasty.</p> Methods <p>Transgender women undergoing two-stage GAS at our tertiary care center were included (04/2019–01/2023). Patients received a composed questionnaire including a validated questionnaire (SF-12). Clinical outcomes and adverse events were evaluated. A regression analysis was performed to identify possible risk factors for a deterioration in sexual function and QOL.</p> Results <p>Fifty-three patients with an average age of 40.27 ± 14.43 years were included. Complications were mostly minor (Clavien Dindo Classification grade I/II). The depth of the neovagina postoperatively was 11.98 ± 2.19&#xa0;cm and the width 3.44 ± 0.98&#xa0;cm. 79.4% of patients were able to experience an orgasm 12 months postoperatively. Orgasm quality increased significantly over the measurement time points (<i>p</i> = 0.003). The SF-12 average physical and mental scores of our collective were similar to the German populations average scores with no significant differences between the time measurement points (<i>p</i> = 0.405 and <i>p</i> = 0.198, respectively). The mental score was always lower than the physical score. A multiple linear regression analysis showed age &lt; 40 years to be a significant influence factor regarding the physical QOL-score (<i>p</i> = 0.048) and the ability to experience an orgasm (<i>p</i> = 0.026).</p> Conclusion <p>Penile inversion vaginoplasty is a safe procedure that yields favorable outcomes regarding sexual function and health-related QOL. Younger age significantly predicts improved physical QOL and the ability to experience orgasm postoperatively.</p>