Identifying the genes that underlie phenotypic variation in natural populations is a central objective of evolutionary genetics. Here, we report the identification of the gene and causal mutation underlying coat colour variation in a free-living population of Soay sheep (Ovis aries). We targeted tyrosinase-related protein 1 (TYRP1), a positional candidate gene based on previous work that mapped the Coat colour locus to an approximately 15cM window on chromosome 2. We identified a non-synonymous substitution in exon IV that was perfectly associated with coat colour. This polymorphism is predicted to cause the loss of a cysteine residue that is highly evolutionarily conserved and likely to be of functional significance. We eliminated the possibility that this association is due to the presence of strong linkage disequilibrium with an unknown regulatory mutation by demonstrating that there is no difference in relative TYRP1 expression between colour morphs. Analysis of this putative causal mutation in a complex pedigree of more than 500 sheep revealed almost perfect co-segregation with coat colour (chi2-test, p<0.0001, LOD=110.20), and very tight linkage between Coat colour and TYRP1 (LOD=29.50).