The early evolution of sex chromosomes has remained obscure for more than a century. The Vandiemenella viatica species group of morabine grasshoppers is highly suited for studying the early stages of sex chromosome divergence and degeneration of the Y chromosome. This stems from the fact that neo-XY sex chromosomes have independently evolved multiple times by X-autosome fusions with different autosomes. Here, we generated new chromosome-level assemblies for two chromosomal races representing karyotypes with and without neo-sex chromosomes (P24XY and P24X0), and sequence data of a third chromosomal race with a different neo-XY chromosome system (P25XY). Interestingly, these two neo-XY chromosomal races are formed by different X-autosome fusions (involving chr1 and chrB, respectively), and we found that both neo-Y chromosomes have partly ceased to recombine with their neo-X counterpart. We show that the neo-XY chromosomes have diverged through accumulation of SNPs and structural mutations, and that many neo-Y-linked genes have degenerated since recombination ceased. However, the non-recombining regions of neo-Y chromosomes host non-degenerated genes crucial for sex determination, such as sex-lethal and transformer, alongside genes associated with spermatogenesis, fertility, and reproduction, illustrating their integrative role as a masculinizing supergene. Contrary to expectations, the neo-Y chromosomes showed (slightly) lower density of transposable elements (TEs) compared to other genomic regions. The study reveals the unique dynamics of young sex chromosomes, with evolution of recombination suppression and pronounced decay of (some) neo-sex chromosome genes, and provides a compelling case illustrating how chromosomal fusions and post-fusion mutational processes contribute to the evolution of supergenes.