Mutations in the X-linked gene sdc-1 affect both sex determination and X-chromosome dosage compensation in C. elegans, providing evidence that these two pathways share a common step. In XX animals (normally hermaphrodites), sdc-1 mutations cause partial masculinization and elevated levels of X-linked gene expression, an apparent shift of both pathways toward their XO modes of expression. The masculinization occurs through effects on the major sex determination pathway, upstream of all previously identified sex-determining genes. XO animals are apparently unaffected by the sdc-1 mutations. We propose a model in which the wild-type sdc-1 activity is either a component of the primary sex-determining signal (the X/Autosome ratio) or involved in transmitting information about this signal to both the sex determination and dosage compensation pathways.