The arrival of COVID-19 pandemic led to a much-publicized mental health crisis for American youth. A subgroup of those youth particularly affected were transgender and gender diverse (TGD) children and adolescents. Yet, a psychoanalytic eye cast on these youth revealed not a crisis, but a dialectic: from a relational and intrapsychic perspective, it was the best of times and the worst of times for TGD young people. This article applies Winnicott's concepts of mirroring and the author's constructs of the true gender self, false gender self, and gender creativity to information gleaned from survey studies and clinical observation. These data were then used to analyze why some TGD children and adolescents experienced the shutdown phase of the pandemic as an opportunity to consolidate their gender self, while others experienced the shutdown as a significant environmental impingement and threat to their gender self and overall well-being.