GREM1 (gremlin1) is a known inhibitor for BMP15 (bone morphogenetic protein 15) family, but its genetic diversity in sheep is unknown. The present study was conducted to analyze the polymorphism of GREM1 gene using PCR- single-strand conformation polymorphism (SSCP) and DNA sequencing methods and to assess the possible association of GREM1 gene polymorphism with reproductive traits in Awassi ewes. A total of 224 ewes, 124 producing singles and 100 producing twins, were included in the study. Two SSCP patterns were detected in two amplified loci within the exon 2. Two exonic novel single nucleotide polymorphism (SNP)s were identified, c.74T > G (the silent SNP p.Met123 =) and c.30T > A with (the missense SNP p.Ile237Phe). Statistical analyses indicated a non-significant (P > 0.05) association of p.Met123 = with the analyzed reproductive traits of fecundity, prolificacy, litter size, and twinning rate. Meanwhile, p.Ile237Phe SNP exhibited a highly significant (P < 0.01) association with the measured reproductive traits, in which ewes with TA genotype (with p.Ile237Phe SNP) exhibited higher litter size, twinning ratio, fecundity, and prolificacy than those with TT genotype (without p.Ile237Phe SNP). The deleterious impact of p.Ile237Phe SNP was observed by the means of ten different state-of-the-art in silico tools that predicted a highly damaging effect of p.Ile237Phe SNP on the structure, function, and stability of gremlin1. In conclusion, the results of our study suggest that p.Ile237Phe SNP has a remarkable negative impact on the gremlin1 structure, function, and stability. Since gremlin1 is a known inhibitor of reproductive performance, a consequent higher reproductive performance was observed in ewes with damaged gremlin1 (with p.Ile237Phe SNP) than those with non-damaged gremlin1 (without p.Ile237Phe SNP). Therefore, it can be stated that the implementation of the novel p.Ile237Phe SNP in the GREM1 gene could be a useful marker in marker-assisted selection. This manuscript is the first one to describe GREM1 gene variations in sheep.