Rose-comb, a classical monogenic trait of chickens, is characterized by a drastically altered comb morphology compared to the single-combed wild-type. Here we show that Rose-comb is caused by a 7.4 Mb inversion on chromosome 7 and that a second Rose-comb allele arose by unequal crossing over between a Rose-comb and wild-type chromosome. The comb phenotype is caused by the relocalization of the MNR2 homeodomain protein gene leading to transient ectopic expression of MNR2 during comb development. We also provide a molecular explanation for the first example of epistatic interaction reported by Bateson and Punnett 104 years ago, namely that walnut-comb is caused by the combined effects of the Rose-comb and Pea-comb alleles. Transient ectopic expression of MNR2 and SOX5 (causing the Pea-comb phenotype) occurs in the same population of mesenchymal cells and with at least partially overlapping expression in individual cells in the comb primordium. Rose-comb has pleiotropic effects, as homozygosity in males has been associated with poor sperm motility. We postulate that this is caused by the disruption of the CCDC108 gene located at one of the inversion breakpoints. CCDC108 is a poorly characterized protein, but it contains a MSP (major sperm protein) domain and is expressed in testis. The study illustrates several characteristic features of the genetic diversity present in domestic animals, including the evolution of alleles by two or more consecutive mutations and the fact that structural changes have contributed to fast phenotypic evolution.