Background The Western mosquitofish, Gambusia affinis, is a model for sex chromosome organization and evolution of female heterogamety. We previously identified a G. affinis female-specific marker, orthologous to the aminomethyl transferase (amt) gene of the related platyfish (Xiphophorus maculatus). Here, we have analyzed the structure and differentiation of the G. affinis W-chromosome, using a cytogenomics and bioinformatics approach. Results The long arm of the G. affinis W-chromosome (Wq) is highly enriched in dispersed repetitive sequences, but neither heterochromatic nor epigenetically silenced by hypermethylation. In line with this, Wq sequences are highly transcribed, including an active nucleolus organizing region (NOR). Female-specific SNPs and evolutionary young transposable elements were highly enriched and dispersed along the W-chromosome long arm, suggesting constrained recombination. Wq copy number expanded elements also include female-specific transcribed sequences from the amt locus with homology to TE. Collectively, the G. affinis W-chromosome is actively differentiating by sexspecific copy number expansion of transcribed TE-related elements, but not (yet) by extensive sequence divergence or gene decay. Conclusions The G. affinis W-chromosome exhibits characteristic genomic properties of an evolutionary young sex chromosome. Strikingly, the observed sex-specific changes in the genomic landscape are confined to the W long arm, which is separated from the rest of the W-chromosome by a neocentromere acquired during sex chromosome evolution and may thus have become functionally insulated. In contrast, W short arm sequences were apparently shielded from repeat-driven differentiation, retained Z-chromosome like genomic features, and may have preserved pseudoautosomal properties.