  A color-magnitude diagram (CMD) based on HST/ACS data is presented for the
Sculptor group dwarf galaxy ESO540-032. The CMD is dominated by an old red
giant population but there is a small population of blue stars confined to the
central regions of the galaxy as orginally noted by Jerjen and Rejkuba from
ground-based data. From the luminosity of the red giant branch tip the distance
is determined as 3.7 +/- 0.2 Mpc consistent with previous estimates. The mean
metallicity is estimated as [Fe/H] = -1.7 +/- 0.2 from the color of the red
giant branch. Isochrone fits indicate an age for the blue star population of
~100 Myr, perhaps less. New HI observations with the Australian Telescope
Compact Array confirm that the dwarf contains approximately 10^6 solar masses
of HI, centered on the optical image. The HI mass to blue luminosity ratio is
0.15, comparable to the Phoenix dwarf in the Local Group. These properties
clearly confirm ESO540-032 as a transition-type dwarf in the Sculptor group.
