Dickkopf-1 (DKK1) is an inhibitor of canonical Wnt signaling pathway and regulates hair follicle morphogenesis and cycling. To investigate the potential involvement of DKK1 in wool production and quality traits, we characterized the genomic structure of ovine DKK1, performed polymorphism detection and association analysis of ovine DKK1 with wool production and quality traits in Chinese Merino. Our results showed that ovine DKK1 consists of four exons and three introns, which encodes a protein of 262 amino acids. The coding sequence of ovine DKK1 and its deduced amino acid sequence were highly conserved in mammals. Eleven single nucleotide polymorphisms (SNPs) were identified within the ovine DKK1 genomic region. Gene-wide association analysis showed that SNP5 was significantly associated with mean fiber diameter (MFD) in the B (selected for long wool fiber and high-quality wool), PW (selected for high reproductive capacity, high clean wool yield and high-quality wool) and U (selected for long wool fiber with good uniformity, high wool yield and lower fiber diameter) strains (p < 4.55 × 10-3 = 0.05/11). Single Nucleotide Polymorphisms wide association analysis showed that SNP8 was significantly associated with MFD in A strain and fleece weight in A (selected for large body size), PM (selected for large body size, high reproductive capacity and high meat yield) and SF (selected for mean fiber diameter less than 18 μm and wool fiber length between 5 and 9 cm) strains (p < 0.05), SNP9 was significantly associated with curvature in B and U strains (p < 0.05) and SNP10 was significantly associated with coefficient of variation of fiber diameter in A, PW and PM strains and standard deviation of fiber diameter in A and PM strains (p < 0.05). The haplotypes derived from these 11 identified SNPs were significantly associated with MFD (p < 0.05). In conclusion, our results suggest that DKK1 may be a major gene controlling wool production and quality traits, also the identified SNPs (SNPs5, 8, 9 and 10) might be used as potential molecular markers for improving sheep wool production and quality in sheep breeding.