It has been recognized that the Merle coat pattern in dogs is not only a visually interesting feature, but it also exerts an important biological role, in terms of hearing and vision impairments. In 2006, the Merle (M) locus was mapped to the SILV gene (aka PMEL) with a SINE element in it, and the inserted retroelement was proven causative to the Merle phenotype. Mapping of the M locus was a genetic breakthrough and many breeders started implementing SILV SINE testing in their breeding programs. Unfortunately, the situation turned out complicated as genotypes of Merle tested individuals did not always correspond to expected phenotypes, sometimes with undesired health consequences in the offspring. Two variants of SILV SINE, allelic to the wild type sequence, have been described so far-Mc and M. Here we report a significantly larger portfolio of existing Merle alleles (Mc, Mc+, Ma, Ma+, M, Mh) in Merle dogs, which are associated with unique coat color features and stratified health impairment risk. The refinement of allelic identification was made possible by systematic, detailed observation of Merle phenotypes in a cohort of 181 dogs from known Merle breeds, by many breeders worldwide, and the use of advanced molecular technology enabling the discrimination of individual Merle alleles with significantly higher precision than previously available. We also show that mosaicism of Merle alleles is an unexpectedly frequent phenomenon, which was identified in 30 out of 181 (16.6%) dogs in our study group. Importantly, not only major alleles, but also minor Merle alleles can be inherited by the offspring. Thus, mosaic findings cannot be neglected and must be reported to the breeder in their whole extent. Most importantly, sperm cells seem to be a significant source of germline Merle allelic variants which can be passed to the offspring on Mendelian basis and explain unusual genotype / phenotype findings in the offspring. In light of negative health consequences that may be attributed to certain Merle breeding strategies, we strongly advocate implementation of the refined Merle allele testing for all dogs of Merle breeds to help the breeders in selection of suitable mating partners and production of healthy offspring.