Sex chromosomes can evolve during the evolution of genetic sex determination (GSD) from environmental sex determination (ESD). Despite theoretical attention, early mechanisms involved in the transition from ESD to GSD have yet to be studied in nature. No mixed ESD-GSD animal species have been reported, except for some species of Daphnia, small freshwater crustaceans in which sex is usually determined solely by the environment, but in which a dominant female sex-determining locus is present in some populations. This locus follows Mendelian single-locus inheritance, but has otherwise not been characterized genetically. We now show that the sex-determining genomic region maps to the same low-recombining peri-centromeric region of linkage group 3 (LG3) in three highly divergent populations of D. magna, and spans 3.6 Mb. Despite low levels of recombination, the associated region contains signs of historical recombination, suggesting a role for selection acting on several genes thereby maintaining linkage disequilibrium among the 36 associated SNPs. The region carries numerous genes involved in sex differentiation in other taxa, including transformer2 and sox9. Taken together, the region determining the NMP phenotype shows characteristics of a sex-related supergene, suggesting that LG3 is potentially an incipient W chromosome despite the lack of significant additional restriction of recombination between Z and W. The occurrence of the female-determining locus in a pre-existing low recombining region illustrates one possible form of recombination suppression in sex chromosomes. D. magna is a promising model for studying the evolutionary transitions from ESD to GSD and early sex chromosome evolution.