The agouti (a) locus acts within the microenvironment of the hair follicle to regulate coat color pigmentation in the mouse. We have characterized a gene encoding a novel 131 amino acid protein that we propose is the one gene associated with the agouti locus. This gene is normally expressed in a manner consistent with a locus function, and, more importantly, its structure and expression are affected by a number of representative alleles in the agouti dominance hierarchy. In addition, we found that the pleiotropic effects associated with the lethal yellow (A^y) mutation, which include pronounced obesity, diabetes, and the development of neoplasms, are accompanied by deregulated overexpression of the agouti gene in numerous tissues of the ault animal.