Transgender and gender diverse (TGD) people experience high rates of stigma and marginalization that are theorized to exacerbate substance use and psychological distress. However, little research has examined the role of various minority stressors in relation to substance use in TGD populations. In this sample of 181 TGD individuals in the U.S. who reported substance use or binge drinking over the past month (M age = 25.6; SD = 5.6), we evaluated whether enacted stigma predicted alcohol use, substance use, and psychological distress. Participants endorsed a high rate of exposure to enacted stigma over the past 6 months (e.g., 52% had been verbally insulted). Furthermore, 27.8% of the sample was classified as having moderate or higher severity drug use, and 35.4% were classified as having hazardous drinking levels. We found that enacted stigma was significantly related to moderate-high drug use and psychological distress. There were no significant associations between stigma variables and hazardous levels of drinking. Enacted stigma had an indirect effect on psychological distress via increased expectations of stigma. This study adds to the growing literature exploring minority stressors in relation to substance use and mental health. Subsequent research is needed to examine TGD-specific factors that may more fully explain how TGD people cope with enacted stigma or that may influence substance use, particularly alcohol use. •Transgender and gender diverse (TGD) people commonly experience minority stressors.•27.8% of the sample was classified as having moderate or higher severity drug use.•35.4% were classified as having hazardous drinking levels.•Enacted stigma was associated with moderate-high drug use and distress.•Neither enacted or expected stigma was associated with alcohol use severity.