In recent years, living conditions of homosexuals have attracted much attention from psychologists. Because homosexuals constantly stay in an environment filled with prejudice, they often internalize negative social attitudes and develop self-prejudice about their sexual orientation. This internal negative attitude toward one’s sex orientation is called internalized homonegativity. Internalized homonegativity is widespread among the homosexuals. It has been considered as the key risk factor for homosexual’s mental health problem and physical health problem. Nowadays, comprehensive understanding of its formation and influence is in excessive lack. Therefore, we mainly review the formation and influence of internalized homonegativity in this study. Firstly, we introduce the concept of internalized homonegativity. This concept was initially named as ‘internalized homophobia’, which emphasizes one’s fear of his own homosexual orientation. However, more and more researchers hold the view that homosexuals’ negative attitudes towards themselves do not conclude the element of fear, thus this concept has been advised to named as ‘internalized homonegativity’. Nowadays, this concept is often understood as a process or a result. We define the internalized homonegativity as homosexuals’ formed negative attitudes towards themselves through the process of internalization of external prejudice, which emphasizes both the process and the results. Secondly, we discuss the mechanisms of formation for internalized homonegativity. Two general mechanisms (role-taking and conflict resolution) and other influence factors (a series of individual factors and environmental factors) may explain the process of formation. We put forward an integrated theoretical model. In this model, we conclude that the processes of role-taking and conflict resolution play mediating roles between external prejudice and internalized homonegativity, while the other influence factors can affect the degree of exposing to prejudice, the process of role-taking and conflict resolution, and the internalized homonegativity. Thirdly, we review the influences of internalize homonegativity from three perspectives: the conditions of mental health, physical health, and problematic behaviors. Overall, recent studies consistently show that internalized homonegativity has a negative effect on the living conditions of homosexuals. The psychological mediation model can account for the effect of internalized homonegativity on the condition of mental health. This model indicates that coping factors, interpersonal factors and cognitive factors all play mediating roles between internalized homonegativity and psychological distress. We infer that this mechanism could also be used to explain the effect of internalized homonegativity on physical health and problematic behaviors. Additionally, concealment of sexual orientation, which represents a special mechanism, could also play a mediating role between internalized homonegativity and living conditions of homosexuals. We also put forward an integrated model of influence mechanisms of internalized homonegativity. At last, we propose three future research directions. (1) Integrated models of formation and influence mechanisms of internalized homonegativity should be further verified and developed; (2) Protective factors which may be beneficial to buffer the negative effect of the internalized homonegativity should be collected; (3) Localization studies about internalized homonegativity should be developed. These future research directions are drawn from the limitations of the previous research.