While research on the mental health of transgender and gender diverse (TGD) individuals has often focused on minority stress and discrimination, emerging scholarship calls for greater attention to affirming experiences such as gender euphoria, which is the joy and comfort associated with being recognized in one's authentic gender. Another particularly salient affirming experience is passing, or being perceived by others in alignment with one's gender identity. Despite its relevance, the psychological mechanisms linking passing to mental health remain underexplored, and little is known about how these relationships may differ across gender identities. This study addresses these gaps by examining the associations among passing, gender euphoria, and mental health among TGD individuals in Hong Kong. A total of 179 participants (18.4% transmasculine, 17.3% transfeminine, and 64.2% non-binary), with a mean age of 27.5 years, were recruited for the study. The results showed that passing was positively associated with both gender euphoria. Gender euphoria significantly mediated the relationship between passing and mental health outcomes, including depression and well-being. Furthermore, gender identity moderated the relationship between passing and gender euphoria, with stronger effects observed among transmasculine and transfeminine individuals compared to non-binary individuals. Similarly, the indirect effects of passing on depression and well-being via gender euphoria were also more pronounced among transmasculine and transfeminine individuals than non-binary individuals. These findings contribute to a growing movement in applied psychology that emphasizes not only harm reduction but also the cultivation of well-being. They underscore the importance of integrating affirming experiences into psychological interventions that support the mental health of TGD individuals. Clinical practices should actively engage with experiences of gender euphoria, including those related to passing, as part of holistic mental health support. Additionally, community-level efforts should foster affirming environments across schools, workplaces, healthcare systems, and community settings.