Visible pigmentation phenotypes can be used to explore the regulation of gene expression and the evolution of coat color patterns in animals. Here, we performed whole-genome and RNA sequencing and applied genome-wide association study, comparative population genomics and biological experiments to show that the 2,809-bp-long LINE-1 insertion in the <i>ASIP</i> (agouti signaling protein) gene is the causative mutation for the white coat phenotype in swamp buffalo (<i>Bubalus bubalis</i>). This LINE-1 insertion (3' truncated and containing only 5' UTR) functions as a strong proximal promoter that leads to a 10-fold increase in the transcription of <i>ASIP</i> in white buffalo skin. The 165 bp of 5' UTR transcribed from the LINE-1 is spliced into the first coding exon of <i>ASIP</i>, resulting in a chimeric transcript. The increased expression of <i>ASIP</i> prevents melanocyte maturation, leading to the absence of pigment in white buffalo skin and hairs. Phylogenetic analyses indicate that the white buffalo-specific <i>ASIP</i> allele originated from a recent genetic transposition event in swamp buffalo. Interestingly, as a similar LINE-1 insertion has been identified in the cattle <i>ASIP</i> gene, we discuss the convergent mechanism of coat color evolution in the Bovini tribe.