One of the oldest problems in evolutionary biology remains largely unsolved. Which mutations generate evolutionarily relevant phenotypic variation? What kinds of molecular changes do they entail? What are the phenotypic magnitudes, frequencies of origin, and pleiotropic effects of such mutations? How is the genome constructed to allow the observed abundance of phenotypic diversity? Historically, the neo-Darwinian synthesizers stressed the predominance of micromutations in evolution, whereas others noted the similarities between some dramatic mutations and evolutionary transitions to argue for macromutationism. Arguments on both sides have been biased by misconceptions of the developmental effects of mutations. For example, the traditional view that mutations of important developmental genes always have large pleiotropic effects can now be seen to be a conclusion drawn from observations of a small class of mutations with dramatic effects. It is possible that some mutations, for example, those in cis-regulatory DNA, have few or no pleiotropic effects and may be the predominant source of morphological evolution. In contrast, mutations causing dramatic phenotypic effects, although superficially similar to hypothesized evolutionary transitions, are unlikely to fairly represent the true path of evolution. Recent developmental studies of gene function provide a new way of conceptualizing and studying variation that contrasts with the traditional genetic view that was incorporated into neo-Darwinian theory and population genetics. This new approach in developmental biology is as important for microevolutionary studies as the actual results from recent evolutionary developmental studies. In particular, this approach will assist in the task of identifying the specific mutations generating phenotypic variation and elucidating how they alter gene function. These data will provide the current missing link between molecular and phenotypic variation in natural populations.