A coat color dilution, called lilac, was observed within the Jacob sheep breed. This dilution results in sheep appearing gray, where black would normally occur. Pedigree analysis suggested an autosomal recessive inheritance. Whole-genome sequencing of a dilute case, a known carrier, and sixteen non-dilute sheep was used to identify the molecular variant responsible for the coat color change. Through investigation of the genes MLPH, MYO5A, and RAB27A, we discovered a nonsynonymous mutation within MLPH, which appeared to match the reported autosomal recessive nature of the lilac dilution. This mutation (NC_019458.2:g.3451931C>A) results in a premature stop codon being introduced early in the protein (NP_001139743.1:p.Glu14*), likely losing its function. Validation testing of additional lilac Jacob sheep and known carriers, unrelated to the original case, showed a complete concordance between the mutation and the dilution. This stop-gain mutation is likely the causative mutation for dilution within Jacob sheep.