<p>The mental health of lesbian and gay individuals in China has received minimal attention. The development of sexual identity is of pivotal significance to the mental health of LGBT individuals. However, the mechanisms underlying this association remain to be elucidated. The present study therefore sought to examine the associations between sexual identity and depression and anxiety in lesbian and gay individuals in China, as well as to examine the mediating effects of psychological flexibility on the associations. A total of 547 lesbian and gay individuals in China were recruited to participate in a study assessing their sexual identity, psychological flexibility, depression, and anxiety. Participants completed a series of online questionnaires, including the Homosexual Identity Scale, the Acceptance and Action Questionnaire-II, the Center for Epidemiological Studies Depression Scale, and the Self-Rating Anxiety Scale. The mediation analyses were conducted using structural equation modeling (SEM) in SPSS 21.0. The results of the correlation analysis demonstrated a negative association between sexual identity and depression (<i>r</i> = -0.22; <i>p</i> &lt; 0.001) and anxiety (<i>r</i> = -0.11; <i>p</i> &lt; 0.01). The analyses of mediation effects indicated that psychological flexibility partially mediated the association between sexual identity and depression (B = -0.22, 95% CI [-0.33, -0.12]), and fully mediated the association between sexual identity and anxiety (B = -0.20, 95% CI [-0.31, -0.10]). This study highlights the importance of developing sexual identity and enhancing psychological flexibility in order to improve the mental health of Chinese lesbian and gay individuals.Consequently, intervention programmes that incorporate these protective factors—sexual identity affirmation and psychological flexibility—may prove efficacious in enhancing mental health outcomes among this population.</p>