This study examined the relationships among psychological variables of sexual prejudice, psychological adjustment, and identity development. It was hypothesized that sexual orientation prejudice would be negatively related to psychological adjustment. It was further hypothesized that identity formation would moderate the relationship between sexual orientation prejudice and psychological adjustment. Participants were 200 college students, ages ranged from 18-48 (M = 21.96, SD = 4.87). Sexual orientation for the participants included self-identified labels of Heterosexual (88.5%), Homosexual (6.5%), Bisexual (3.5%), Pansexual (1%), and Demisexual (0.5%). Survey data were collected through a Psychology Research Experience website (SONA). Results revealed a negative correlation between Heterophobia, and Life Satisfaction. However, no statistically significant correlation was found between Homophobia and Life Satisfaction. Heterophobia (but not Homophobia) was significantly correlated with identity Exploration in Depth and Identification with Commitment. The measure of sexual adjustment revealed both Heterophobia and Homophobia positively correlated with Sexual Anxiety and Sexual Fear. The identity variables (Sexual Exploration and Sexual Commitment) were found to be related to sexual orientation prejudice. The moderator hypothesis was partially supported in that two moderator variables significantly interacted with sexual orientation prejudice (Heterophobia) and psychological adjustment (Sexual Anxiety and Sexual Fear). However, more research is needed to further elucidate the intricate relationships among psychological variables of sexual orientation prejudice, psychological adjustment, and identity development.