Chinese Erhualian is the most prolific pig breed in the world. The breed exhibits exceptionally large and floppy ears. To identify genes underlying this typical feature, we previously performed a genome scan in a large scale White Duroc × Erhualian cross and mapped a major QTL for ear size to a 2-cM region on chromosome 7. We herein performed an identical-by-descent analysis that defined the QTL within a 750-kb region. Historically, the large-ear feature has been selected for the ancient sacrificial culture in Erhualian pigs. By using a selective sweep analysis, we then refined the critical region to a 630-kb interval containing 9 annotated genes. Four of the 9 genes are expressed in ear tissues of piglets. Of the 4 genes, PPARD stood out as the strongest candidate gene for its established role in skin homeostasis, cartilage development, and fat metabolism. No differential expression of PPARD was found in ear tissues at different growth stages between large-eared Erhualian and small-eared Duroc pigs. We further screened coding sequence variants in the PPARD gene and identified only one missense mutation (G32E) in a conserved functionally important domain. The protein-altering mutation showed perfect concordance (100%) with the QTL genotypes of all 19 founder animals segregating in the White Duroc × Erhualian cross and occurred at high frequencies exclusively in Chinese large-eared breeds. Moreover, the mutation is of functional significance; it mediates down-regulation of β-catenin and its target gene expression that is crucial for fat deposition in skin. Furthermore, the mutation was significantly associated with ear size across the experimental cross and diverse outbred populations. A worldwide survey of haplotype diversity revealed that the mutation event is of Chinese origin, likely after domestication. Taken together, we provide evidence that PPARD G32E is the variation underlying this major QTL.