Here, we uncover the genetic architecture of a balanced sexual mimicry polymorphism and identify behavioral mechanisms that may be involved in its maintenance in the swordtail fish Xiphophorus birchmanni. We find that ~40% of X. birchmanni males develop a “false gravid spot”, a melanic pigmentation pattern that mimics the “pregnancy spot” associated with sexual maturity in female live-bearing fish. Using genome-wide association mapping, we detect a single intergenic region associated with variation in the false gravid spot, which is upstream of kitlga, a gene involved in melanophore patterning. By performing long-read sequencing within and across populations, we identify complex structural rearrangements between alternate alleles at this locus. The false gravid spot haplotype drives increased allele-specific expression of kitlga, which provides a mechanistic explanation for the increased melanophore abundance that causes the spot. We speculate that structural variants affecting gene regulation may be an underappreciated driver of balanced polymorphisms across diverse species.