The bearded dragon, Pogona vitticeps (Agamidae: Reptilia) is an agamid lizard endemic to Australia. Like crocodilians and many turtles, temperature-dependent sex determination (TSD) is common in agamid lizards, although many species have genotypic sex determination (GSD). P. vitticeps is reported to have GSD, but no detectable sex chromosomes. Here we used molecular cytogenetic and differential banding techniques to reveal sex chromosomes in this species. Comparative genomic hybridization (CGH), GTG- and C-banding identified a highly heterochromatic microchromosome specific to females, demonstrating female heterogamety (ZZ/ZW) in this species. We isolated the P. vitticeps W chromosome by microdissection, re-amplified the DNA and used it to paint the W. No unpaired bivalents were detected in male synaptonemal complexes at meiotic pachytene, confirming male homogamety. We conclude that P. vitticeps has differentiated previously unidentifable W and Z micro-sex chromosomes, the first to be demonstrated in an agamid lizard. Our finding implies that heterochromatinization of the heterogametic chromosome occurred during sex chromosome differentiation in this species, as is the case in some lizards and many snakes, as well as in birds and mammals. Many GSD reptiles with cryptic sex chromosomes may also prove to have micro-sex chromosomes. Reptile microchromosomes, long dismissed as non-functional minutiae and often omitted from karyotypes, therefore deserve closer scrutiny with new and more sensitive techniques.