The flag, which took 30 people 10 days to sew and measures 40 metres by 20 metres, has been unveiled in Brisbane.
Its unfurling coincides with International Trans Day of Visibility and has been created by Trans Justice Meanjin to protest against what they say are the Queensland government's anti-trans health policies.
The state was the first to ban hormone treatments for children diagnosed with gender dysphoria following claims puberty blockers were given to kids as young as 12 without authorised care.
Under the ban, hormone therapies are no longer accessible to new patients aged under 18.
The move was followed by the Northern Territory's Country Liberal Party government in late-2025, when it also outlawed puberty blockers.
Inspiration for the flag came from overseas, where local advocacy groups protested anti-trans policies in the United States, Trans Justice Meanjin member Jodie Hall told AAP.
"I was inspired by the demonstrations of joy and pride and also resistance," she said.
"Trans people deserve access to the things we need to live a good life and part of that is access to health care that gives us freedom to live our lives like everyone else."
Trans and gender-diverse Australians are experiencing consistent and distressing patterns of discrimination across schools and universities, healthcare, workplaces, housing and the justice system, according to a report.
The Australia's Human Rights Commission report found discrimination is widespread with serious impacts on people's safety, access to essential services, and full participation in society.
It makes 19 recommendations for reform including nationally consistent laws to protect people from vilification and violence, along with urgent improvements to data collection so services meet real needs.
"(Trans and gender-diverse people) contribute to our families and society, and they are entitled to equal respect under the law like anyone else, but too often their rights are not realised," Sex Discrimination Commissioner Anna Cody said.
"The experiences shared with the commission show when there are gaps in legal protections, when services aren't designed for everyone and when data is missing or inaccurate, people are left out (and) the consequences can be devastating."
Ms Hall said the report clearly showed there were serious attacks on trans lives and trans rights happening in all facets of society.
"There is a concerted effort to erase us as people," she said.
"The federal government needs to take serious action to support trans people to live a life as full members of the society. We cannot cede ground to far-right politicians and lobbyists.
"Trans people deserve to thrive and by making the world's largest trans flag we will be impossible to ignore."
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