Mice carrying the piebald mutation exhibit white coat spotting due to the regional absence of neural crest-derived melanocytes. We reported previously that the piebald locus encodes the Ednrb gene and that piebald mice express low levels of structurally intact Ednrb mRNA and EDNRB protein (Hosoda, K., Hammer, R. E., Richardson, J. A., Baynash, A. G., Cheung, J. C., Giaid, A., and Yanagisawa, M. (1994) Cell 79, 1267-1276). Here, we report that both the life span of the Ednrb mRNA and the promoter activity of the Ednrb gene are indistinguishable between wild-type and piebald mice. Introns 2-6 of the Ednrb gene in piebald mice were correctly excised with an efficiency indistinguishable from those in wild-type mice in exon trapping experiments. We found that the piebald allele of the Ednrb gene has a 5.5-kb retroposon-like element in intron 1 possessing canonical sequences of a polyadenylation signal and a splice acceptor site. Abnormal hybrid transcripts carrying exon 1 of the Ednrb gene and a portion of the 5.5-kb element are expressed in piebald mice. The insertion of the 5.5-kb element into a heterologous intron in a mammalian expression vector markedly reduced the expression of the reporter gene. Premature termination and aberrant splicing of the Ednrb transcript caused by the retroposon-like element in intron 1 lead to a reduced level of the normal Ednrb transcript, which is responsible for the partial loss-of-function phenotype of piebald mice.