In the Mexican axolotl (Ambystoma mexicanum), sex is determined by a single Mendelian factor, yet its sex chromosomes do not exhibit morphological differentiation typical of many vertebrate taxa that possess a single sex-determining locus. As sex chromosomes are theorized to differentiate rapidly, species with undifferentiated sex chromosomes provide the opportunity to reconstruct early events in sex chromosome evolution. Whole genome sequencing of 48 salamanders, targeted chromosome sequencing and in situ hybridization were used to identify the homomorphic sex chromosome that carries an A. mexicanum sex-determining factor and sequences that are present only on the W chromosome. Altogether, these sequences cover ~300 kb of validated female-specific (W chromosome) sequence, representing ~1/100,000th of the 32 Gb genome. Notably, a recent duplication of ATRX, a gene associated with mammalian sex-determining pathways, is one of few functional (non-repetitive) genes identified among these W-specific sequences. This duplicated gene (ATRW) was used to develop highly predictive markers for diagnosing sex and represents a strong candidate for a recently-acquired sex determining locus (or sexually antagonistic gene) in A. mexicanum.