Environmental sex-determination (ESD) is the phenomenon by which environmental factors regulate sex-determination, typically occurring during a critical period of early development. Southern flounder (Paralichthys lethostigma) exhibit temperature-dependent sex-determination that appears to be restricted to the presumed XX female genotype with the extremes of temperature, both high and low, skewing sex ratios toward males. In order to evaluate other environmental factors that may influence sex-determination, we investigated the influence of background color and cortisol on sex-determination in southern flounder. Experiments involving three sets of tanks, each painted a different color, were conducted at different temperatures using southern flounder of mixed XX-XY genotype. The studies involved rearing juvenile southern flounder in either black, gray, or blue tanks and sex-determination was assessed by gonadal histology. In both studies, blue tanks showed significant male-biased sex ratios (95 and 75% male) compared with black and gray tanks. The stress corticosteroid cortisol may mediate sex-determining processes associated with environmental variables. Cortisol from the whole body was measured throughout the second experiment and fishes in blue tanks had higher levels of cortisol during the period of sex-determination. These data suggest that background color can be a cue for ESD, with blue acting as a stressor during the period of sex-determination, and ultimately producing male-skewed populations. In a separate study using XX populations of southern flounder, cortisol was applied at 0, 100, or 300 mg/kg of gelatin-coated feed. Fish were fed intermittently prior to, and just through, the period of sex-determination. Levels of gonadal P450 aromatase (cyp19a1) and forkhead transcription factor L2 (FoxL2) messenger RNA (mRNA) were measured by qRT-PCR as markers for differentiation into females. Müllerian-inhibiting substance mRNA was used as a marker of males' gonadal development. Control fish showed female-biased sex ratios approaching 100%, whereas treatment with 100 mg/kg cortisol produced 28.57% females and treatment with 300 mg/kg cortisol produced only 13.33% females. These results suggest that cortisol is a critical mediator of sex-determination in southern flounder by promoting masculinization. This linkage between the endocrine stress axis and conserved sex-determination pathways may provide a mechanism for adaptive modification of sex ratio in a spatially and temporally variable environment.