What explains the persistence of prejudice against LGBTQ individuals? Building upon social identity theory, we argue that the strength of binary gender identity (the importance individuals place on being a woman or man for their sense of self) is a crucial determinant of the degree to which one perceives LGBTQ individuals as out-groups, fostering prejudice. To test this, we first conduct a nationally representative survey in the United States (N = 1,013). We find that higher binary gender identity strength (BGIS) is associated with significantly lower LGBTQ tolerance, an effect that, while cutting across ideological lines, is primarily driven by men. We then conduct two large-scale experiments (N = 4,268 in total) with nationally representative samples and distinct designs, demonstrating that while BGIS causally affects tolerance for both women and men, predictably manipulating BGIS is difficult. Our study highlights binary gender identity as a potential source of LGBTQ prejudice, while also underscoring the challenges in developing prejudice-reducing interventions.