Environmental injustice has an unequal impact on marginalized groups, which contributes to high differences in physical and mental health. The defined communities, especially those of color, experience a mix of environmental degradation and systematic inequality, which leads to long-term psychological trauma. This paper looks into the psychological impacts of environmental hazards on disadvantaged communities, such as stress, trauma, and anxiety. Based on case examples, like the Flint Water Crisis, Cancer Alley, and the experience of Indigenous people, this study reviews how environmental injustice permeates physical health challenges to affect mental health on a deeper level. The research combines the literature with qualitative and quantitative surveys, interviews, and environmental evaluations that fail to state the psychological cost of environmental injustice, which is seldom mentioned. To sum up, the paper suggests implementing trauma-informed community planning and policy changes that consider physical and mental health issues of vulnerable populations in terms of both aspects. The results add significance to the necessity of cross-systemic activities that facilitate the promotion of mental health support, resilience, and environmental justice.