textlessptextgreaterThe composition and structure of fleece variation observed in mammals is a consequence of a strong selective pressure for fiber production after domestication. In sheep, fleece variation discriminates ancestral species carrying a long and hairy fleece from modern domestic sheep (Ovis aries) owning a short and woolly fleece. Here, we report that the “woolly” allele results from the insertion of an antisense EIF2S2 retrogene (called asEIF2S2) into the 3 UTR of the IRF2BP2 gene leading to an abnormal IRF2BP2 transcript. We provide evidence that this chimeric IRF2BP2/asEIF2S2 messenger 1) targets the genuine sense EIF2S2 RNA and 2) creates a long endogenous double-stranded RNA which alters the expression of both EIF2S2 and IRF2BP2 mRNA. This represents a unique example of a phenotype arising via a RNA-RNA hybrid, itself generated through a retroposition mechanism. Our results bring new insights on the sheep population history thanks to the identification of the molecular origin of an evolutionary phenotypic variation.textless/ptextgreater