Woolly hair (WH) is an inherited hair shaft anomaly characterized by tightly curled hair that can display either autosomal dominant (ADWH) or recessive (ARWH) inheritance. We and others have recently shown that ARWH is caused by mutations in P2RY5 or LIPH genes. However, the molecular basis of ADWH has not previously been reported. In this study, we identified a Pakistani family with ADWH in which all affected individuals had short and tightly curled hair with normal hair density. The family showed linkage to chromosome 12q12-q14.1, containing the type II keratin gene cluster. We discovered a heterozygous mutation N148K within the helix initiation motif of the keratin 74 (KRT74) gene in all affected family members. KRT74 encodes the inner root sheath (IRS)-specific epithelial (soft) keratin 74. We demonstrate that the mutant K74 protein results in disruption of keratin intermediate filament formation in PtK2 cells, most likely in a dominant-negative manner. Furthermore, to test whether mutations in the corresponding murine Krt74 gene might underlie a new mouse phenotype, we sequenced the mouse Krt71-74 genes in the dominant Caracul-like 4 (Cal4) allele which is characterized by wavy coat phenotype and maps to the same region of mouse chromosome 15 as other Caracul (Ca) alleles. We identified a novel heterozygous mutation E440K not in Krt74, but in the neighboring gene, Krt71. Krt71 was previously reported to harbor other Ca mutations, as well as coding SNPs that are associated with curly-coated dogs. In this study, we provide the first genetic evidence for a phenotype resulting from a mutation in a hair follicle-specific epithelial keratin in humans. Our findings further underscore the crucial roles of the IRS-specific epithelial keratin genes Krt71-74 not only in hair disorders, but open the possibility that these genes may function as genetic determinants of normal hair texture variation across mammalian species.