A series of differentially expressed circular RNAs (circRNAs), microRNAs (miRNAs), and messenger RNAs (mRNAs) were identified through sequencing in the hair follicle tissues of Hu sheep with small-waved and straight wool patterns. Based on these findings, the circCSPP1-miR-10a-BMP7 (Bone Morphogenetic Protein 7) regulatory network was constructed. The preliminary study highlighted that miR-10a and the BMP7 gene exhibited not only significant differential expression across hair follicle tissues with different patterns in Hu sheep but also had an impact on the proliferation of hair papilla cells. The proliferation of hair papilla cells is intricately linked to hair follicle development and growth. Consequently, we selected the circCSPP1-miR-10a-BMP7 regulatory network to validate its role in promoting hair papilla cell proliferation in Hu sheep. Firstly, the authenticity of circCSPP1 was successfully confirmed through RNase R digestion and reverse primer amplification. Additionally, nucleoplasmic localization analysis determined that circCSPP1 was predominantly distributed in the cytoplasm. Using the dual-luciferase gene reporter system, we verified the targeting relationship between circCSPP1 and miR-10a, building upon our previous validation of the miR-10a-BMP7 interaction. This clarified the competing endogenous RNA (ceRNA) mechanism within the circCSPP1-miR-10a-BMP7. Furthermore, rescue experiments confirmed that circCSPP1 competitively binds to miR-10a, thereby regulating BMP7 expression and influencing the proliferation of hair papilla cells in Hu sheep. This discovery provides a solid foundation for future investigations into the mechanisms underlying wool curvature and the formation of lambskin patterns, offering insights into the complex regulatory networks that govern these phenotypic traits in Hu sheep.