The lotus (Nelumbonaceae: Nelumbo Adans.) is a highly desired ornamental plant, comprising only two extant species, the sacred lotus (N. nucifera Gaerten.) with red flowers and the American lotus (N. lutea Willd.) with yellow flowers. Flower color is the most obvious difference of two species. To better understand the mechanism of flower color differentiation, the content of anthocyanins and the expression levels of four key structural genes (e.g., DFR, ANS, UFGT and GST) were analyzed in two species. Our results revealed that anthocyanins were detected in red flowers, not yellow flowers. Expression analysis showed that no transcripts of GST gene and low expression level of three UFGT genes were detected in yellow flowers. In addition, three regulatory genes (NnMYB5, NnbHLH1 and NnTTG1) were isolated from red flowers and showed a high similarity to corresponding regulatory genes of other species. Sequence analysis of MYB5, bHLH1 and TTG1 in two species revealed striking differences in coding region and promoter region of MYB5 gene. Population analysis identified three MYB5 variants in Nelumbo: a functional allele existed in red flowers and two inactive forms existed in yellow flowers. This result revealed that there was an association between allelic variation in MYB5 gene and flower color difference. Yeast two-hybrid experiments showed that NnMYB5 interacts with NnbHLH1, NlbHLH1 and NnTTG1, and NnTTG1 also interacts with NnbHLH1 and NlbHLH1. The over-expression of NnMYB5 led to anthocyanin accumulation in immature seeds and flower stalks and up-regulation of expression of TT19 in Arabidopsis. Therefore, NnMYB5 is a transcription activator of anthocyanin synthesis. This study helps to elucidate the function of NnMYB5 and will contribute to clarify the mechanism of flower coloration and genetic engineering of flower color in lotus.