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Wild sheep and many primitive domesticated breeds have two coats: coarse hairs covering shorter, finer fibres. Both are shed annually. Exploitation of wool for apparel in the Bronze Age encouraged breeding for denser fleeces and continuously growing white fibres. The Merino is regarded as the culmination of this process. Archaeological discoveries, ancient images and parchment records portray this as an evolutionary progression, spanning millennia. However, examination of the fleeces from feral, two-coated and woolled sheep has revealed a ready facility of the follicle population to change from shedding to continuous growth and to revert from domesticated to primitive states. Modifications to coat structure, colour and composition have occurred in timeframes and to sheep population sizes that exclude the likelihood of variations arising from mutations and natural selection. The features are characteristic of the domestication phenotype: an assemblage of developmental, physiological, skeletal and hormonal modifications common to a wide variety of species under human control. The phenotypic similarities appeared to result from an accumulation of cryptic genetic changes early during vertebrate evolution. Because they did not affect fitness in the wild, the mutations were protected from adverse selection, becoming apparent only after exposure to a domestic environment. The neural crest, a transient embryonic cell population unique to vertebrates, has been implicated in the manifestations of the domesticated phenotype. This hypothesis is discussed with reference to the development of the wool follicle population and the particular roles of Notch pathway genes, culminating in the specific cell interactions that typify follicle initiation.