Abstract Background Understanding the experiences of transgender and gender-diverse (TGD) youth is essential for developing appropriate support services. However, studies focusing on TGD youth under 18 outside clinical settings are scarce, limiting effective support development. The requirement for parental consent in participatory research poses ethical and logistical challenges, impacting the safety, well-being, and privacy of adolescent participants. This dynamic complicates the balance between adolescents’ rights to autonomy and privacy and parental duties to protect their children. This review aims to illuminate the ethical and methodological challenges in participatory research with TGD youth. Methods A systematic review of bibliometric databases from 2006 to 2022 was conducted, focusing on transgender and gender non-conforming identities, adolescence, qualitative and participatory research methods, and consent issues. This review was registered with PROSPERO in November 2022 (CRD42022368360). Results Of 3,794 articles initially identified, 291 met the inclusion criteria, and 48 were extensively reviewed. Research with TGD youth commonly faces ethical tensions including parental inclusion in the consent process, safeguarding participant safety and privacy, ensuring confidentiality, and creating environments that allow TGD youth to express themselves and feel empowered. Methodological challenges include engaging public and stakeholders, recruiting participants, data collection, and maintaining research integrity. Conclusion & Implications The literature on participatory research with young transgender and gender-diverse individuals reveals intricate and often conflicting issues related to consent procedures, power dynamics, and the researcher’s role. These findings are applicable in various legal and geographical contexts, providing insights that can guide practices globally. Key messages • Research reveals ethical dilemmas in participatory research with transgender young people, highlighting difficulties around consent and the need for tailored support. • Understanding the complexities of research ethics enables better support for transgender and gender-diverse young people during research.