Character customization is a prominent feature in digital games, affording users the ability to tailor one’s virtual self-representation to match aspects of their actual or ideal self, influencing psychological well-being. The mental health implications of character customization can be partially explained by self-discrepancy theory, which argues that achieving congruence with one’s avatar reduces cognitive dissonance. However, the role of undesirable self-concepts such as mental health ailments have largely been overlooked in this context despite forming part of one’s identity. In theory, (...) customization of an avatar representing undesirable self-concepts presents a self-regulatory paradox: individuals desire to reduce discrepancies with a self-representation, yet they also desire to enlarge discrepancies with a disliked-self. To reconcile this, two experiments explored the psychological implications of imbuing avatars with undesirable self-concepts. In Study 1, participants customized an avatar to represent anxiety within themselves. Customization significantly reduced state anxiety compared to a control group, supporting the proposed discrepancy-reduction mechanism. Study 2 employed a 2 × 2 between-subjects design, with participants either destroying or observing an anxiety avatar. Destruction of customized anxiety avatars resulted in the largest reduction in anxiety among all conditions, supporting the proposed discrepancy-enlargement mechanism. Theoretical and practical implications for the use of avatar-based e-mental health interventions are discussed. (shrink)