Ambras syndrome (AS) is a rare form of congenital hypertrichosis with excessive hair on the shoulders, face and ears. Cytogenetic studies have previously implicated an association with rearrangements of chromosome 8. Here we define an 11.5 Mb candidate interval for AS on chromosome 8q based on cytogenetic breakpoints in three patients. TRPS1, a gene within this interval, was deleted in a patient with an 8q23 chromosomal rearrangement, while its expression was significantly downregulated in another patient with an inversion breakpoint 7.3 Mb downstream of TRPS1. Here, we describe the first potential long-range position effect on the expression of TRPS1. To gain insight into the mechanisms by which Trps1 affects the hair follicle, we performed a detailed analysis of the hair abnormalities in Koa mice, a mouse model of hypertrichosis. We found that the proximal breakpoint of the Koa inversion is located 791 kb upstream of Trps1. Quantitative real-time polymerase chain reaction, in situ hybridization and immunofluorescence analysis revealed that Trps1 expression levels are reduced in Koa mutant mice at the sites of pathology for the phenotype. We determined that the Koa inversion creates a new Sp1 binding site and translocates additional Sp1 binding sites within a highly conserved stretch spanning the proximal breakpoint, providing a potential mechanism for the position effect. Collectively, these results describe a position effect that downregulates TRPS1 expression as the probable cause of hypertrichosis in AS in humans and the Koa phenotype in mice.