Agouti signaling protein (ASIP) functions to regulate pigmentation in mice, while its role in many other animals and in humans has not been fully determined. In this study, we identify a 190-kb tandem duplication encompassing the ovine ASIP and AHCY coding regions and the ITCH promoter region as the genetic cause of white coat color of dominant white/tan (A(Wt)) agouti sheep. The duplication 5' breakpoint is located upstream of the ASIP coding sequence. Ubiquitous expression of a second copy of the ASIP coding sequence regulated by a duplicated copy of the nearby ITCH promoter causes the white sheep phenotype. A single copy ASIP gene with a silenced ASIP promoter occurs in recessive black sheep. In contrast, a single copy functional wild-type (A(+)) ASIP is responsible for the ancient Barbary sheep coat color phenotype. The gene duplication was facilitated by homologous recombination between two non-LTR SINE sequences flanking the duplicated segment. This is the first sheep trait attributable to gene duplication and shows nonallelic homologous recombination and gene conversion events at the ovine ASIP locus could have an important role in the evolution of sheep pigmentation.