The 2 Spirits program has operated under the Queensland AIDS Council (QuAC) for the past 21 years, with offices in Brisbane and Cairns.
The council had previously received around $400,000 per year from the federal government, but the team was advised in a letter this week that funding would be cut-off after June 30, following a review of its services.
"The AIDS Council has been aware that since 2015 they would only get funding up to 30 June 2017, and was advised to make alternative arrangements," a federal health department spokesperson told NITV.
Without the service, transgender woman Keilani Dorante fears the queer Indigenous community will be left vulnerable.
The 27-year-old says she would've been "lost" without the 2 Spirits program, which supported her after moving to Brisbane from north Queensland.
"Where are others like ourselves going to go?," she asks.
"They'll turn to drugs, they'll do anything and everything wrong. Suicide."
Brett Mooney, 2 Spirits project officer, also has grave predictions if the service folds.
"My initial thought was, 'who looks after our kids now? Who advocates for them? How are they going to be heard?'," he told NITV.
"When a few deaths, higher rates of STI have impacted on our community, that’s when we’ll see a reaction."
Co-founder of support group IndigiLez, Tanya Quakawoot, agrees suicide is a "huge issue".
"My concern is for our young people," she says.
"We’re losing our young people left, right and centre, and if they don’t have the vital support that they need, what’s gonna happen?"
Sexually transmitted infections also have a disproportionate affect amongst First Nations people.
A 2015 study found that rates of chlamydia, gonorrhoea and syphilis were between three to 18 times higher among the Aboriginal and Torres Strait Islander community that the non-Indigenous population.
The 2 Spirits program was responsible for one of the most recognisable health promotion programs in Australia, Condoman, which sought to promote and encourage condom use.
WATCH: 2 Spirits helped launch for the highly-successful Condoman sexual health campaign
"Now is not the time to be defunding, or removing a service that is so entrenched within the Indigenous community," says Queensland AIDS Council Executive Director Michael Scott.
A federal health department spokesperson says the government will continue to fund other primary health care services.
'As far as being Indigenous and transgender, there’s not really anything out there at all.'
But Jeremy Anderson, a 30-year-old transgender man, says the Indigenous LGBTI community needs a tailored service.
"As far as being Indigenous and transgender, there’s not really anything out there at all," he told NITV.
"For me, coming out as trans and queer was fine, but associating that with being Indigenous was like, where do I fit in?" he says.
"For a long time I didn’t think I had a community.
"2 Spirits was like this is your mob, you can be Indigenous and queer, so it’s just opened up so many doors for me and made me feel proud of myself."
Mr Scott says the program will be forced to fold unless it can find an alternative funding source before June 30.