Understanding the dynamics of mental health stigma through existing frameworks, especially in minorities with higher stigma, is problematic. There is a need to reconceptualize stigma, particularly in highly traumatized groups. The current study examines the validity of a new development-based trauma framework that conceptualizes stigma as a type III chronic trauma that contributes to negative mental health effects. This framework proposes that public stigma is a unique chronic traumatic stress that mediates the effects of similar trauma types in mental health patients. To test this proposition, this study explores the relationships between internalized stigma of mental illness (ISMI), different trauma types, and posttrauma spectrum disorders. ISMI, posttraumatic stress disorder, other posttrauma spectrum disorders, and cumulative trauma measures were administered to a sample of 399 mental health patients that included Arab (82%), Muslim (84%), and refugee (31%), as well as American patients (18%). Age in the sample ranged from 18 to 76 years (M = 39.66, SD = 11.45), with 53.5% males. Hierarchical multiple regression, t tests, and path analyses were conducted. Results indicated that ISMI predicted posttraumatic stress disorder and other posttrauma spectrum disorders after controlling for cumulative trauma. ISMI was associated with other chronic collective identity traumas. While Arab Americans, Muslims, and refugees had higher ISMI scores than other Americans, the elevated chronic trauma levels of these groups were significant predictors of these differences. The results provide evidence to support ISMI traumatology model. Implications of the results for treating victims of ISMI, especially Arab Americans, Muslims and refugees are discussed.