Background Gender affirmation is known to improve mental health among trans adults, but its impact on young people has been questioned. This study examined the mental health outcomes associated with social, medical, and legal gender affirmation among trans young people in Australia. Methods Data from 1697 trans young people aged 14–21 who participated in an Australian national survey were analyzed using multivariable logistic regression analyses. We measured associations between gender affirmation and various mental health variables, including levels of happiness, psychological distress, anxiety, self-harm and recent suicidal ideation and suicide attempts. Associations between gender affirmation and young people’s wellbeing, including experiences of verbal harassment, homelessness, and drug use were also examined. Results Participants who had affirmed their gender legally and medically (via hormone therapy or surgery/ies) reported lower levels of anxiety and psychological distress, while legal gender affirmation was associated with lower suicidal ideation. Social affirmation was not directly associated with wellbeing outcomes but was linked to an increased likelihood of verbal harassment and homelessness. All forms of gender affirmation were associated with increased drug use, which likely reflects the greater opportunities for social connection and LGBTQ-community involvement that trans young people experience when they take steps to affirm their gender. Conclusion All forms of gender affirmation were positively associated with the wellbeing of trans young people. Though young people who had socially affirmed their gender faced higher likelihoods of experiencing verbal harassment and homelessness, this is likely linked to their increased visibility and subsequent vulnerability to discrimination. These findings highlight the need for targeted interventions to address transphobia and discrimination. A comprehensive approach to supporting the wellbeing of trans young people should include legal, medical, and social affirmation, as well as addressing potential negative outcomes via societal education.