Mutations with conflicting fitness effects in males and females accumulate in sexual populations, reducing their adaptive capacity. Although quantitative genetic studies indicate that sexually antagonistic polymorphisms are common, their molecular basis and population genetic properties remain poorly understood. Here, we show in fruit flies how natural variation at a single gene generates sexual antagonism through phenotypic effects on cuticular hydrocarbon (CHC) traits that function as both mate signals and protectors against abiotic stress across a latitudinal gradient. Tropical populations of Drosophila serrata have polymorphic CHCs producing sexual antagonism through opposing but sex-limited effects on these two fitness-related functions. We dissected this polymorphism to a single fatty-acyl CoA reductase gene, DsFAR2-B, that is expressed in oenocyte cells where CHCs are synthesised. RNAi mediated disruption of the DsFAR2-B ortholog in D. melanogaster oenocytes affected CHCs in a similar way to that seen in D. serrata. Population genomic analysis revealed that balancing selection likely operates at the DsFAR2-B locus in the wild. Our study provides insights into the genetic basis of sexual antagonism in nature and connects sexually varying antagonistic selection on phenotypes with balancing selection on genotypes that maintains molecular variation.