The current study evaluated the stage theory of Homosexual Identity Formation (HIF) developed by Cass (1979), in terms of the relationship between stage of gay identity development and psychosocial well-being. Four hundred twenty-five males (12 to 64 years, M = 29.2) reporting sexual attraction to other men provided demographic information and completed psychosocial measures: the Happiness-Sadness Scale (McGreal & Joseph, 1993), the Satisfaction with Life Scale (Diener, Emmons, Larsen & Griffin, 1985), the UCLA Loneliness Scale (Russell, Peplau & Ferguson, 1978), the Index of Self-Esteem (Hudson, 1982), and the Gay Identity Questionnaire (Brady & Busse, 1994). Correlation analysis and ANCOVAs controlling for age and nationality demonstrated that the 6 sequential stages of HIF were associated with a U-shaped function for the psychosocial variables. Well-being was high during the initial Confusion and Comparison stages of HIF, was reduced during the middle Tolerance and Acceptance stages, and was again high in the later Pride and Synthesis stages. Each of the psychosocial variables was significantly different according to stage of development (p < .001). Qualitative analysis of subjects' comments also revealed support for the U-shaped pattern.