We here describe sequencing and assembly of both the autosomes and the sex chromosome in M. picta, the closest related species to the guppy, Poecilia reticulata. M. picta is a close outgroup for studying the guppy, an important organism for studies in evolutionary ecology and in sex chromosome evolution. The guppy XY pair (LG12) has long been studied as a test case for the importance of sexually antagonistic variants in selection for suppressed recombination between Y and X chromosomes. The guppy Y chromosome is not degenerated, but appears to carry functional copies of all genes that are present on its X counterpart. The X chromosomes of M. picta and its relative M. parae are homologous to the guppy XY pair, but their Y chromosomes are highly degenerated. A complete genome sequence of M. picta may therefore contribute to understanding how the guppy Y evolved. These fish species’ genomes are estimated to be about 750 Mb, with high densities of repetitive sequences, suggesting that long-read sequencing is needed. We evaluated several assembly approaches, and used our results to investigate the extent of Y chromosome degeneration in this species.