Most species' sex chromosomes are derived from ancient autosomes and show few signatures of their origins. We studied the sex chromosomes of Drosophila miranda, where a neo-Y chromosome originated only approximately 1 million years ago. Whole-genome and transcriptome analysis reveals massive degeneration of the neo-Y, that male-beneficial genes on the neo-Y are more likely to undergo accelerated protein evolution, and that neo-Y genes evolve biased expression toward male-specific tissues-the shrinking gene content of the neo-Y becomes masculinized. In contrast, although older X chromosomes show a paucity of genes expressed in male tissues, neo-X genes highly expressed in male-specific tissues undergo increased rates of protein evolution if haploid in males. Thus, the response to sex-specific selection can shift at different stages of X differentiation, resulting in masculinization or demasculinization of the X-chromosomal gene content.