Nematodes and insects are the two most speciose animal phyla and nematode–insect associations encompass widespread biological interactions. To dissect the chemical signals and the genes mediating this association, we investigated the effect of an oriental beetle sex pheromone on the development and behavior of the nematode Pristionchus pacificus. We found that while the beetle pheromone is attractive to P. pacificus adults, the pheromone arrests embryo development, paralyzes J2 larva, and inhibits exit of dauer larvae. To uncover the mechanism that regulates insect pheromone sensitivity, a newly identified mutant, Ppa-obi-1, is used to reveal the molecular links between altered attraction towards the beetle pheromone, as well as hypersensitivity to its paralyzing effects. Ppa-obi-1 encodes lipid-binding domains and reaches its highest expression in various cell types, including the amphid neuron sheath and excretory cells. Our data suggest that the beetle host pheromone may be a species-specific volatile synomone that co-evolved with necromeny.