Queer individuals experience unique stressors related to their minority status, negatively impacting their mental health. One factor contributing to these disparities is exposure to minority stress, which involves social stressors related to minority status. Previous research has focused on the negative impacts of minority stress, with less attention to its impact on positive psychological functioning. This study explored the relationship between minority stress and psychological well-being among 270 queer individuals in German-speaking countries. Participants completed an online survey assessing minority stress and psychological well-being. Analyses of Covariance indicated that proximal factors of minority stress—such as self-stigma, concealment, and expectations of rejection—had a particularly negative impact on psychological well-being, but no effects could be found for gender and sexual orientation. Additionally, gender identity but not sexual orientation had a significant effect on minority stress, with non-binary and other gender identities reporting higher minority stress compared to females. Thematic analysis revealed concerns about survey inclusivity, gender identity challenges, and intersectionality of minority identities. Our findings emphasize the significant impact of minority stress on the psychological well-being of queer individuals, particularly non-binary people and those with diverse gender identities, while demonstrating the need for inclusive research methodologies, tailored interventions, and policies addressing the diverse experiences within the queer community.