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Even though previous studies have shown that transgender youth have poorer mental health and more experiences of being bullied than their cisgender counterparts, and that bullying associates with poorer mental health, knowledge on such associations in different gender identity groups is scarce. This study investigated how mental health problems and experiences of being bullied appear across different gender identity groups, and how bullying is associated with mental health among the groups in question. Data from the Finnish School Health Promotion 2021 study (n = 152,880, mean age 16.2 years (standard deviation 1.22)) was used and categorized into four gender identity groups: cisgender girls (n = 76,521), cisgender boys (n = 69,735), transfeminine youth (n = 1317), and transmasculine youth (n = 5307). Transgender youth experienced more bullying and reported poorer mental health than cisgender youth. While transfeminine youth faced the most bullying, transmasculine youth had the most mental health symptoms. In each group, bullying associated with poorer mental health. Compared to cisgender boys without bullying experiences, odds of poorer mental health were dozens-fold among transmasculine youth with weekly bullying experiences. In addition, compared to cisgender boys with bullying experiences, odds of poorer mental health were greater among all other gender identity groups with bullying experiences, and among transmasculine youth in particular (e.g., odds ratio of generalized anxiety = 8.36 (95% confidence interval, 6.59–10.6)). Bullying is associated with poorer mental health in all youth, but transgender youth, and especially transmasculine youth, may be in an even more vulnerable position for its implications. This suggests that there is a need for improving effective measures to decrease bullying in schools and to improve wellbeing of transgender youth.