In conjunction with a 3-year prospective study of 199 transgender women from the New York City Area, we attempted to better understand why non-Whites are much more likely than Whites to become HIV infected. We first assessed associations of ethnicity with sex work, sexual risk behavior for HIV, and biologically-determined HIV/STI, and then assessed the extent to which these ethnic differences are explained by socioeconomic factors, immigration status, and sexual orientation. Statistical techniques included generalized estimating equations and Cox proportional hazards. As expected, compared to Whites, Blacks and Hispanics were more involved in the sex trade, more likely to report unprotected receptive anal intercourse, and as a result, more likely to become HIV/STI infected. All of these associations were mediated by androphilia, and to a lesser extent androphilia/gynephilia. Sexual orientation is a significant but little recognized factors associated with new cases of HIV/STI among transgender women of color.