In Lythrypnus dalli, the bluebanded goby, reproductive success is primarily determined by functional sex, and functional sex is determined largely by rank in the dominance hierarchy. In most natural social groups of L. dalli, one male is at the apex of the hierarchy, and 1 to 7 females are lower in rank. When a male exits the group, a female ascends to the top of the hierarchy and becomes a male. We have examined this process in a simplified environment--a pair of females--that allows us to identify behavior associated with the formation of a dominance relationship and any other phenotypic changes associated with dominance, sex change or both. We found that pairs of L. dalli females quickly and readily form stable dominance relationships, with the dominant fish changing sex into a male. This dominant animal also rapidly increases in body size and length of its dorsal fin. In summary, dominant L. dalli females change sex in this simplified environment, providing excellent opportunities to examine the early behavioral and morphological changes associated with dominance and sex change.