So far, two genes associated with familial melanoma have been identified, accounting for a minority of genetic risk in families. Mutations in CDKN2A account for approximately 40% of familial cases, and predisposing mutations in CDK4 have been reported in a very small number of melanoma kindreds. Here we report the whole-genome sequencing of probands from several melanoma families, which we performed in order to identify other genes associated with familial melanoma. We identify one individual carrying a novel germline variant (coding DNA sequence c.G1075A; protein sequence p.E318K; rs149617956) in the melanoma-lineage-specific oncogene microphthalmia-associated transcription factor (MITF). Although the variant co-segregated with melanoma in some but not all cases in the family, linkage analysis of 31 families subsequently identified to carry the variant generated a log of odds (lod) score of 2.7 under a dominant model, indicating E318K as a possible intermediate risk variant. Consistent with this, the E318K variant was significantly associated with melanoma in a large Australian case-control sample. Likewise, it was similarly associated in an independent case-control sample from the United Kingdom. In the Australian sample, the variant allele was significantly over-represented in cases with a family history of melanoma, multiple primary melanomas, or both. The variant allele was also associated with increased naevus count and non-blue eye colour. Functional analysis of E318K showed that MITF encoded by the variant allele had impaired sumoylation and differentially regulated several MITF targets. These data indicate that MITF is a melanoma-predisposition gene and highlight the utility of whole-genome sequencing to identify novel rare variants associated with disease susceptibility.