Abstract Background The origin of sex chromosomes requires the establishment of recombination suppression between the proto-sex chromosomes. In many fish species, the sex chromosome pair is homomorphic with a recent origin, providing species for studying how and why recombination suppression evolved in the initial stages of sex chromosome differentiation, but this requires accurate sequence assembly of the X and Y (or Z and W) chromosomes, which may be difficult if they are recently diverged. Results Here we produce a haplotype-resolved genome assembly of zig-zag eel (Mastacembelus armatus), an aquaculture fish, at the chromosomal scale. The diploid assembly is nearly gap-free, and in most chromosomes, we resolve the centromeric and subtelomeric heterochromatic sequences. In particular, the Y chromosome, including its highly repetitive short arm, has zero gaps. Using resequencing data, we identify a ~7 Mb fully sex-linked region (SLR), spanning the sex chromosome centromere and almost entirely embedded in the pericentromeric heterochromatin. The SLRs on the X and Y chromosomes are almost identical in sequence and gene content, but both are repetitive and heterochromatic, consistent with zero or low recombination. We further identify an HMG-domain containing gene HMGN6 in the SLR as a candidate sex-determining gene that is expressed at the onset of testis development. Conclusions Our study supports the idea that preexisting regions of low recombination, such as pericentromeric regions, can give rise to SLR in the absence of structural variations between the proto-sex chromosomes.