Identifying with a minority group may protect one’s psychological well-being from the harm of group discrimination. This study tested this theory with lesbian, gay, or bisexual (LGB) individuals in a non-Western cultural context. A total of 240 LGB individuals living in mainland China responded to an online survey. Roles of group identification and its three dimensions (i.e., behavioural engagement, cognitive clarity, and affective pride) were explored in the association between perceived discrimination and psychological outcomes (i.e., psychological well-being and distress). Results of fitting mediation models and regression models with moderators indicated that group identification was neither a significant mediator nor a moderator in the association between perceived discrimination and psychological outcomes. Nevertheless, perceived discrimination was found to positively predict group identification, and group identification was found to positively predict psychological well-being after controlling for perceived discrimination, sexual orientation, and gender. Additionally, the three dimensions of group identification had different implications: cognitive clarity, not behavioural engagement or affective pride, predicted psychological well-being and distress. These findings drew attention to the multidimensionality of group identity and the potential impacts of the unique societal context on sexual-minority group identity. Please refer to the Supplementary Material section to find this article’s Community and Social Impact Statement.