Domestic yaks (Bos grunniens) provide meat and other necessities for Tibetans living at high altitude on the Qinghai-Tibetan Plateau and in adjacent regions. Comparison between yak and the closely related low-altitude cattle (Bos taurus) is informative in studying animal adaptation to high altitude. Here, we present the draft genome sequence of a female domestic yak generated using Illumina-based technology at 65-fold coverage. Genomic comparisons between yak and cattle identify an expansion in yak of gene families related to sensory perception and energy metabolism, as well as an enrichment of protein domains involved in sensing the extracellular environment and hypoxic stress. Positively selected and rapidly evolving genes in the yak lineage are also found to be significantly enriched in functional categories and pathways related to hypoxia and nutrition metabolism. These findings may have important implications for understanding adaptation to high altitude in other animal species and for hypoxia-related diseases in humans.