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Background: Few studies have explored the health and development of AIDS orphans using the positive youth development (PYD) framework. Grounded in this framework, the main objective of this study is to examine how internal assets (i.e., resilience) and external assets (i.e., school connectedness, peer support) affect subjective well-being among Yi AIDS orphans in the Liangshan Yi Autonomous Prefecture, Sichuan province, China. Methods: A cross-sectional survey was conducted by interviewing 571 AIDS orphans and 979 non-orphans of Yi ethnic minority from 5th-10th grades. Structural equation models (SEM) were utilized to identify and estimate the direct and indirect effects of internal and external assets on subjective well-being. Results: The average score of subjective well-being was significantly lower for AIDS orphans than for in non-orphans (P < 0.05). Resilience, school connectedness, peer support (number of friends, caring friends), and self-rated physical health had significant and positive direct effects on subjective well-being. In addition, the effects of school connectedness, and peer support on subjective well-being were mediated by resilience. Conclusions: Positive individual and school-related contextual assets can bolster subjective well-being among AIDS orphans. The design of health intervention programs for AIDS orphans should incorporate these positive development assets. [ABSTRACT FROM AUTHOR]