ILGA-Europe, an umbrella group for LGBTI (lesbian, gay, bisexual, transsexual and intersex) rights campaigners, said hate speech is fuelling discrimination and physical attacks.
Its executive director, Evelyne Paradis, said "growing populism, extremism and xenophobia" are affecting sexual, ethnic and other minority groups.
"In many countries LGBTI groups find themselves among the most vulnerable," she told AFP.
Campaigners at the conference in Cyprus said the LGBTI movement had made enormous gains in some countries, successfully campaigning for laws allowing same-sex marriage and banning discrimination.
But they said populist politicians were fuelling a backlash.
"Whereas in the last few years we had seen a decrease in direct targeting of offices of LGBTI organisations' offices, that's starting to reappear," Paradis said.
Brian Sheehan, who co-chairs the group's executive board, said inequalities created by austerity policies were damaging social cohesion and threatening "the diversity that is at the heart of the European project".
"Post-Brexit we've seen a rise in attacks on foreigners and we also seen a rise in attacks on LGBTI people," he said of the vote in Britain to leave the EU.
"The notion of being different or other has been politically manipulated."
ILGA-Europe, which represents 490 organisations from 45 countries, is holding its conference in Nicosia two years after the city held its first Greek Cypriot gay pride parade.
The conference opened with a drinks gala at Nicosia's presidential palace -- something Sheehan said would be unthinkable in many European countries.
"It's an extremely important event for Cyprus, which has come a long way in recognising rights of LGBTI community in last few years," said Stella Kyriakides, a member of the Cypriot parliament.
But she said elsewhere in Europe, an influx of refugees was stirring up xenophobia.
That prompted many to vote for far-right parties in local elections in Germany and France, she said.
"I am extremely concerned that we are seeing extremist movements on the rise in Europe and especially in recent years," she said.
"Xenophobia can instigate a lot of other phobias in societies."