A landmark event in gay history occurred on December 15, 1973 when the American Psychiatric Association declassified homosexuality as a mental disorder in its Diagnostic & Statistical Manual of Mental Disorders, aka DSM. I was 16 at the time and not yet aware of my sexual orientation so I didn't know what it was like to live with this stigma, but it could hardly have been good for self esteem - and probably contributed to mental health problems. However, despite this step forward society would still find plenty of ways to continue the stigmatization of gay men and lesbians.
To appease those in the mental health profession who disagreed with this declassification a new disorder was classified in 1980 - Ego Dystonic Homosexuality. Individuals suffering from this disorder were homosexuals who wished their sexual orientation was different (the way some in society still would like us to feel). It would be delisted in 1986.
Finally, in 2006 the Pentagon announced that it no longer deemed homosexuality a mental disorder - but it would still be another five years before the military's "don't ask, don't tell" policy was ended.
A more comprehensive discussion of this topic can be found at: http://psychology.ucdavis.edu/rainbow/html/facts_mental_health.html