Fibroblast growth factor 5 (FGF5) is a famous dominant inhibitor of anagen phase of hair cycle. Mutations of FGF5 gene result in a longer wool in mice, donkeys, dogs, cats, and even in human eyelashes. Sheep is an important source of wool production. How to improve the production of wool quickly and effectively is an urgent problem to be solved. In this study, we generated five FGF5-knockout Dorper sheep by the CRISPR/Cas9 system. The expression level of FGF5 mRNA in knockout (KO) sheep decreased significantly, and all FGF5 proteins were dysfunctional. The KO sheep displayed a significant increase in fine-wool and active hair-follicle density. The crosstalk between androgen and Wnt/β-catenin signaling downstream of FGF5 gene plays a key role. We established downstream signaling cascades for the first time, including FGF5, FGFR1, androgen, AR, Wnt/β-catenin, Shh/Gli2, c-MYC, and KRTs. These findings further improved the function of FGF5 gene, and provided therapeutic ideas for androgen alopecia.