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Fibroblast growth factor 5 (FGF5) regulates hair length in humans and a variety of other animals. To investigate whether FGF5 has similar effects in sheep, we used clustered regularly interspaced short palindromic repeat (CRISPR)/CRISPR-associated 9 (Cas9) to generate loss-of-function mutations with the FGF5 gene in Chinese Merino sheep. A total of 16 lambs were identified with genetic mutations within the targeting locus: 13 lambs had biallelic modifications and three lambs had monoallelic modifications. Characterization of the modifications revealed that 13 were frameshift mutations that led to premature termination, whereas the other three were in-frame deletions. Thus, CRISPR/Cas9 efficiently generated loss-of-function mutations in the sheep FGF5 gene. We then investigated the effect of loss of FGF5 function on wool traits in 12 lambs and found that wool staple length and stretched length of genetically modified (GM) yearling sheep were significantly longer compared with that of wild-type (WT) control animals. The greasy fleece weight of GM yearling sheep was also significantly greater compared with that of WT sheep. Moreover, the mean fiber diameter in GM sheep showed no significant difference compared with WT sheep, suggesting that the increase in greasy fleece weight was likely attributed to the increase in wool length. The results of this study suggest that CRISPR/Cas9-mediated loss of FGF5 activity could promote wool growth and, consequently, increase wool length and yield.