In the white throated sparrow (Z. albicollis), two alternative morphs differing in both plumage and behavior segregate with a large rearrangement on the second largest chromosome. As with sex chromosomes, the rearranged version of chromosome 2 (known as ZAL2m), is maintained in a near-constant state of heterozygosity, offering a unique opportunity to investigate how both degenerative and selective processes act during the early evolutionary stages of 'supergenes.' Here we generated, synthesized, and analyzed extensive genomic and transcriptomic data to better understand, at a finer resolution than has previously been possible, the evolutionary forces shaping the evolution of both ZAL2m and the standard version of the chromosome, ZAL2. First, we found that features of ZAL2m are consistent with substantially reduced recombination and low levels of degeneration. Second, we found evidence of selective sweeps having taken place on both ZAL2 and ZAL2m chromosomes after the rearrangement event. Third, we showed that positive selection is associated with allelic bias in gene expression in the brain, suggesting that antagonistic selection has operated on gene regulation. Finally, we discovered a 15-gene region exhibiting two long-range haplotypes inside the rearrangement on ZAL2m. Remarkably, these two haplotypes appear to have been maintained by balancing selection, retaining genetic diversity within the non-recombining autosomal supergene. Together, these analyses illuminate the evolution of a young chromosomal polymorphism, revealing that complex selective processes act concurrently with genetic degeneration to drive the evolution of supergenes.