We report the discovery of a neo-sex chromosome in Monarch butterfly, Danaus plexippus, and several of its close relatives. Z-linked scaffolds in the D. plexippus genome assembly were identified via sex-specific differences in Illumina sequencing coverage. Additionally, a majority of the D. plexippus genome assembly was assigned to chromosomes based on counts of 1-to-1 orthologs relative to the butterfly Melitaea cinxia (and two other Lepidopteran species), where genome scaffolds have been robustly mapped to linkage groups. Combining sequencing-coverage based Z-linkage with homology based chromosomal assignments provided strong evidence for a Z-autosome fusion in the Danaus lineage, involving the autosome homologous to chromosome 21 in M. cinxia. Coverage analysis also identified three scaffolds containing notable assembly errors resulting in chimeric Z-autosome fusions. The timing of this Z-autosome fusion event currently remains ambiguous due to incomplete sampling of karyotypes in the Danaini tribe of butterflies. The discovery of a neo-Z and the provisional assignment of chromosome linkage for >90% of D. plexippus genes lay the foundation for novel insights concerning sex chromosome evolution in this increasingly prominent female-heterogametic model species for functional and evolutionary genomics.