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Abstract Background Koala (Koa) is a dominant mutation in mice causing bushy muzzle and pinna, and is associated with a chromosomal inversion on the distal half of chromosome 15. To identify the gene responsible for the Koa phenotypes, we investigated phenotypes of Koa homozygous mice and determined the breakpoints of the inversion with a genetic method using recombination between two different chromosomal inversions. Results Skeletal preparation of Koa homozygotes showed marked deformity of the ribs and a wider skull with extended zygomatic arches, in addition to a general reduction in the lengths of long bones. They also had open eyelids at birth caused by a defect in the extension of eyelid anlagen during the embryonic stages. The proximal and distal breakpoints of the Koa inversion were determined to be 0.8-Mb distal to the Trsps1 gene and to 0.1-Mb distal to the Hoxc4 gene, respectively, as previously reported. The phenotypes of mice with the recombinant inverted chromosomes revealed the localization of the gene responsible the Koa phenotype in the vicinity of the proximal recombinant breakpoint. Expression of the Trsps1 gene in this region was significantly reduced in the Koa homozygous and heterozygous embryos. Conclusion While no gene was disrupted by the chromosomal inversion, an association between the Koa phenotype and the proximal recombinant breakpoint, phenotypic similarities with Trps1-deficient mice or human patients with TRSP1 mutations, and the reduced expression of the Trsps1 gene in Koa mice, indicated that the phenotypes of the Koa mice are caused by the altered expression of the Trps1 gene.