Keratin-associated proteins (KAPs) are structural components of wool fibres. High-glycine/tyrosine (HGT)-KAPs are a subset of the KAP family, and their abundance in fibres varies. In this study, we report the discovery of an ovine HGT-KAP gene to which we assigned the name KRTAP36-2. Polymerase chain reaction and single-strand conformation polymorphism (PCR-SSCP) analyses revealed four variants of this gene in a screening population of 170 sheep from a variety of breeds. The DNA sequencing of the variants revealed four single-nucleotide polymorphisms (SNPs) and a dinucleotide deletion. Three of these SNPs were in the coding region, and one of these was non-synonymous and potentially led to the amino acid substitution p.Cys27Gly near the middle of the protein. The remaining SNP was located near the putative TATA box, and the di-nucleotide deletion was near the putative transcription initiation site. The effect of this variation in KRTAP36-2 was investigated in 274 Southdown × Merino lambs that were the progeny of five sires. Variation was only found to be associated with wool yield, that is, the proportion of the greasy fleece that remained as clean fleece upon scouring (expressed as a percentage). This may have some value in increasing wool production.