Fat-tail content of sheep breeds is varied and the molecular mechanisms regulating fat-tail development have not been well characterized. Aiming at better identifying the important candidate genes and their functional pathways contributing to fat deposition in the tail, a comparative transcriptome analysis was performed between fat- (Lori-Bakhtiari) and thin-tailed (Zel) Iranian sheep breeds using RNA-seq. The experiment was conducted on six male lambs (three lambs per each breed) at seven months of age. Four different combinations of aligners and statistical methods including Hisat2 + edgeR, Hisat2 + DESeq2, STAR + edgeR and STAR + DESeq2 were used to identify the differentially expressed genes (DEGs). The DEGs were selected for functional enrichment analysis and protein-protein interaction (PPI) network construction. Module analysis was also conducted to mine the functional sub-networks from the PPI network. In total, 264 genes including 80 up- and 184 down-regulated genes were identified as DEGs. The RNA-Seq results were validated by Q-RT-PCR. Functional analysis of DEGs and the module analysis of PPI network demonstrated that in addition to pathways affecting lipid metabolism, a series of enriched functional terms related to "response to interleukin", "MAPK signaling pathways", "Wnt signaling pathway", "ECM-receptor interaction", "regulation of actin cytoskeleton", and "response to cAMP" might contribute to the deposition of fat in tails of sheep. Overall results using RNA-Seq analysis characterized important candidate genes involved in the fatty acid metabolism and regulation of fat deposition, suggesting novel insights into molecular aspects of fat-tail metabolism in sheep. Selected DEGs should be further investigated as potential markers associated with the fat-tail development in sheep breeds.