Hair color differences are among the most obvious examples of phenotypic variation in humans. Although genome-wide association studies (GWAS) have implicated multiple loci in human pigment variation, the causative base-pair changes are still largely unknown. Here we dissect a regulatory region of the KITLG gene (encoding KIT ligand) that is significantly associated with common blond hair color in northern Europeans. Functional tests demonstrate that the region contains a regulatory enhancer that drives expression in developing hair follicles. This enhancer contains a common SNP (rs12821256) that alters a binding site for the lymphoid enhancer-binding factor 1 (LEF1) transcription factor, reducing LEF1 responsiveness and enhancer activity in cultured human keratinocytes. Mice carrying ancestral or derived variants of the human KITLG enhancer exhibit significant differences in hair pigmentation, confirming that altered regulation of an essential growth factor contributes to the classic blond hair phenotype found in northern Europeans.