In drosophilid flies, male recombination and neo-sex chromosome formation are rare. Following the genotyping of full-sib families with 20 microsatellite markers and subsequent cytological work, we found evidence of both male recombination and neo-sex chromosome formation in Scaptodrosophila hibisci. As far as we are aware, this is the first report of male recombination and neo-sex chromosome formation co-occurring in a drosophilid fly. Two autosomal loci, Sh29c and Sh90, showed aberrant segregation of male parental alleles. We describe how an autosomal fission followed by fusion of one of the autosomal fragments to the Y chromosome to create a Y1Y2X1X2/X1X1X2X2 sex determination system provides the most parsimonious explanation of the patterns we observe. Male recombination was observed in three families, including autosomal linkage groups and the Y1/X2 linkage group. In addition to the X1 linkage group, two autosomal linkage groups were identified.