Natural selection is less efficient in the absence of recombination. As a result, non-recombining sequences, such as sex chromosomes, tend to degenerate over time. Although the outcomes of recombination arrest are typically observed after many millions of generations, recent neo-sex chromosomes can give insight into the early stages of this process. Here we investigate the evolution of neo-sex chromosomes in the Spanish marbled white butterfly, Melanargia ines, where a Z-autosome fusion has turned the homologous autosome into a non-recombining neo-W chromosome. We show that these neo-sex chromosomes are likely limited to the Iberian population of M. ines, and that they arose around the time when this population split from North-African populations, around 1.5 million years ago. Recombination arrest of the neo-W chromosome has led to an excess of premature stop codons and frameshift mutations, and reduced gene expression compared to the neo-Z chromosome. Surprisingly, we identified two regions of 1 Mb at one end of the neo-W that are both less diverged from the neo-Z and less degraded than the rest of the chromosome, suggesting a history of rare but repeated genetic exchange between the two neo-sex chromosomes. These plateaus of neo-sex chromosome divergence suggest that neo-W degradation can be locally reversed by rare recombination between neo-W and neo-Z chromosomes.