Few if any studies before the AIDS epidemic suggested that male homosexuals may on average have higher levels of depression than male heterosexuals. However, several samples of homosexual and bisexual men in HIV studies suggest that depression and anxiety are high in these populations, and that this psychiatric morbidity began before the AIDS epidemic. We tested the hypothesis that high childhood gender nonconformity (CGN) is associated with depression and anxiety, and so might account for differences in these variables among samples of homosexuals. A total of 254 homosexual or bisexual male subjects were assessed for depression, anxiety, and associated symptoms using various self-report and interview measures, as well as for CGN (using the Freund Feminine Gender Identity scale, FGI). For comparison purposes only, we also evaluated the subjects for the DSM-III diagnosis of Ego-Dystonic Homosexuality. Highly gender nonconforming men (high FGI scores) were more likely to have current symptoms of anxiety and depression by self-report, and to have had a lifetime history of depression by clinical interview. This association was more often due to FGI items dealing with childhood than adulthood. When the FGI was broken into subscales by a prior factor analysis, stepwise regression suggested that the subscale measuring core gender identity nonconformity (so-called gender dysphoria) was more reliably associated with depression and anxiety than were the factors measuring nonconformity in the areas of masculine and feminine gender roles, or genitoerotic (sexual) roles. This subscale was also the only FGI measure correlating with Ego-Dystonic Homosexuality. AIDS (CDC stage and HIV serostatus) and age did not account for these findings. We conclude that the often-reported higher levels of depression, anxiety, and associated symptoms among homosexual and bisexual men in AIDS studies are more common in the subgroup of such men who are gender dysphoric. Theoretical and clinical implications of these data are discussed.