In many organisms, master control genes coordinately regulate sex-specific aspects of development. SDC-2 was shown to induce hermaphrodite sexual differentiation and activate X chromosome dosage compensation in Caenorhabditis elegans. To control these distinct processes, SDC-2 acts as a strong gene-specific repressor and a weaker chromosome-wide repressor. To initiate hermaphrodite development, SDC-2 associates with the promoter of the male sex-determining gene her-1 to repress its transcription. To activate dosage compensation, SDC-2 triggers assembly of a specialized protein complex exclusively on hermaphrodite X chromosomes to reduce gene expression by half. SDC-2 can localize to X chromosomes without other components of the dosage compensation complex, suggesting that SDC-2 targets dosage compensation machinery to X chromosomes.