Southern flounder (Paralichthys lethostigma) exhibit environmental sex determination (ESD), where environmental factors can influence phenotypic sex during early juvenile development but only in the presumed XX female genotype. Warm and cold temperatures masculinize fish with mid-range conditions producing at most 50% females. Due to sexually dimorphic growth, southern flounder fisheries are dependent upon larger females. Wild populations could be at risk of masculinization from ESD due to globally increasing water temperatures. We evaluated the effects of habitat and temperature on wild populations of juvenile southern flounder in North Carolina, USA. While northern habitats averaged temperatures near 23 °C and produced the greatest proportion of females, more southerly habitats exhibited warmer temperatures (>27 °C) and consistently produced male-biased sex ratios (up to 94% male). Rearing flounder in the laboratory under temperature regimes mimicking those of natural habitats recapitulated sex ratio differences observed across the wild populations, providing strong evidence that temperature is a key factor influencing sex ratios in nursery habitats. These studies provide evidence of habitat conditions interacting with ESD to affect a key demographic parameter in an economically important fishery. The temperature ranges that yield male-biased sex ratios are within the scope of predicted increases in ocean temperature under climate change.