In the past two decades, scientists have elucidated the molecular mechanisms behind Drosophila sex determination and dosage compensation. These two processes are controlled essentially by two different sets of genes, which have in common a master regulatory gene, Sex-lethal (Sxl). Sxl encodes one of the best-characterized members of the family of RNA binding proteins. The analysis of different mechanisms involved in the regulation of the three identified Sxl target genes (Sex-lethal itself, transformer, and male specific lethal-2) has contributed to a better understanding of translation repression, as well as constitutive and alternative splicing. Studies using the Drosophila system have identified the features of the protein that contribute to its target specificity and regulatory functions. In this article, we review the existing data concerning Sxl protein, its biological functions, and the regulation of its target genes.