Microphthalmia with coloboma behaves as an incompletely penetrant recessive trait in the merle Australian Shepherd dog. Microphthalmia and related anomalies occurred more often in merle dogs with predominate white than in merles with limited white hair coat. The study did not establish a genetic relationship between the amount of merling and microphthalmia. The inheritance of merling behaved as a dominant trait, but fewer non-merles occurred than were expected. Variations in white spotting were satisfactorily explained by several hypotheses involving 2 or 3 alleles at the S locus. Each requires some or all homozygous merles to be largely white and 1 or more of the S alleles to exhibit some extent of dominance over other alleles in the series.