Fibroblast growth factor 5 (FGF5) plays key roles in promoting the transition from the anagen to catagen during the hair follicle cycle. The sheep serves as an excellent model for studying hair growth and is frequently utilized in various research processes related to human skin diseases. We used the CRISPR/Cas9 system to generate four FGF5-edited Dorper sheep and only low levels of FGF5 were detected in the edited sheep. The density of fine wool in GE sheep was markedly increased, and the proportion of fine wool with a diameter of 14.4-20.0 μm was significantly higher. The proliferation signal in the skin of gene-edited (GE) sheep was stronger than in wild-type (WT) sheep. FGF5 editing decreased cortisol concentration in the skin, further activated the activity of antioxidant enzymes such as Glutathione peroxidase (GSH-Px), and regulated the expression of Wnt signaling pathways containing Wnt agonists (Rspondins, Rspos) and antagonists (Notum) in hair regeneration. We suggest that FGF5 not only mediates the activation of antioxidant pathways by cortisol, which constitutes a highly coordinated microenvironment in hair follicle cells, but also influences key signals of the Wnt pathway to regulate secondary hair follicle (SHF) development. Overall, our findings here demonstrate that FGF5 plays a significant role in regulating SHF growth in sheep and potentially serves as a molecular marker of fine wool growth in sheep breeding.