Metazoans use diverse and rapidly evolving mechanisms to determine sex. In Drosophila melanogaster an X-chromosome-counting mechanism determines the sex of an individual by regulating the master switch gene, Sex-lethal (Sxl). The X-chromosome dose is communicated to Sxl by a set of X-linked signal elements (XSEs), which activate transcription of Sxl through its 'establishment' promoter, SxlPe. Here we describe a new XSE called sisterlessC (sisC) whose mode of action differs from that of previously characterized XSEs, all of which encode transcription factors that activate SxlPe directly. In contrast, sisC encodes a secreted ligand for the Drosophila Janus kinase (JAK) and 'signal transducer and activator of transcription' (STAT) signal transduction pathway and is allelic to outstretched (os, also called unpaired). We conclude that sisC works indirectly on Sxl through this signalling pathway because mutations in sisC or in the genes encoding Drosophila JAK or STAT reduce expression of SxlPe similarly. The involvement of os in sex determination confirms that secreted ligands can function in cell-autonomous processes. Unlike sex signals for other organisms, sisC has acquired its sex-specific function while maintaining non-sex-specific roles in development, a characteristic that it shares with all other Drosophila XSEs.