Very little is known about how the differential treatment of sexual minorities could influencesubjective reports of overall well-being. This paper seeks to fill this gap. Data from two largesurveys that provide nationally representative samples for two different countries – Australia(the HILDA Survey) and the UK (the UK Household Longitudinal Study) – are used toestimate a simultaneous equations model of life satisfaction. The model allows for selfreportedsexual identity to influence a measure of life satisfaction both directly and indirectlythrough seven different channels: (i) income; (ii) employment; (iii) health (iv) partnerrelationships; (v) children; (vi) friendship networks; and (vii) education. Lesbian, gay andbisexual persons are found to be significantly less satisfied with their lives than otherwisecomparable heterosexual persons. In both countries this is the result of a combination ofdirect and indirect effects.