I don't really have a perfect solution to this problem. But, I did some reading on bossy/mean/teasing behavior among elementary school children recently.
According to what I've read, bossy/mean/teasing bahavior usually comes from (a) trying to gain power or (b) cover up one's insecurity.
How is your son's relationship with his older sister or other friends? Is it possible that he feels like his sister/friends are often "in charge" and he wants to have control over something (and therefore uses his little sister as a control source)?
When your son starts to harass his little sister, take your daughter away quickly without giving attention to your son saying something like "Mary, let me show you something fun over here, " or "I'll read you a book, Mary."
The book I read also suggested giving the bossy child a "job" like feeding the family pet, or take in the mail so he feels like he has control over something.
My dd can be a bit bossy/mean to one of her friends (she is not this way with other kids), so I am trying to find the solution too.