Introduction <p>Studies have shown that internalized homophobia, a significant component of minority stressors, has negative impacts on sexual and gender minority (SGM) individuals’ health outcomes, while interpretation flexibility, the ability to revise existing interpretations and integrate novel information, has shown its mitigating impact on the adverse effects of minority stresses. This study aimed to investigate the association between interpretation flexibility and internalized homophobia and their moderating factors in the SGM community.</p> Methods <p>One hundred ninety-six USA-based participants, self-identified as sexual and gender minorities and ranged from ages 18–72, were recruited from an online platform. Multi-variable regression models were applied in the moderation effects of community connectedness and everyday discrimination between interpretation flexibility and internalized homophobia.</p> Results <p>The findings revealed that internalized homophobia was inversely associated with negative interpretation inflexibility and SGM community connectedness. After controlling for demographic factors, higher negative interpretation inflexibility and lower community connectedness were associated with internalized homophobia, but no association was found between internalized homophobia and perceived discrimination. Perceived discrimination and SGM community connectedness did not show significant moderating effects on the relationship between negative interpretation inflexibility and internalized homophobia. Different gender pathways were also found in this study, while lower SGM community connectedness was associated with higher internalized homophobia in both man- and woman-identifying subgroups. Furthermore, lower levels of SGM community connectedness were associated with higher negative interpretation inflexibility and internalized homophobia among woman-identified individuals.</p> Conclusions <p>This study emphasized the potential protective impact of interpretation flexibility and SGM community connectedness in mitigating internalized homophobia and the presence of gender-specific pathways.</p> Policy Implications <p>Our results indicate the importance of gender-adaptive evaluation of intervention from providers.</p>