Selection for yellow and white grain types has been central to post-domestication improvement of maize. While genetic control of carotenoid biosynthesis in yellow endosperm is attributed primarily to the Yellow1 (Y1) gene for phytoene synthase, far less is known about the role of the dominant white endosperm factor White Cap (Wc). We show that the Wc locus contains multiple copies of a Carotenoid cleavage dioxygenase 1 (Ccd1) gene that encodes a carotenoid-degrading enzyme with broad specificity. The dominant white phenotype would thus result from increased turnover of carotenoids in the endosperm. Wc alleles include from 1 to 23 copies of the Ccd1 gene, a range that gives rise to proportional variation of Ccd1 expression in diverse maize organs. The Wc locus is widely distributed in maize, occurring most often in white inbreds and landraces that also carry recessive y1 alleles and therefore lack effective capacity for synthesis of CCD1 substrates in the endosperm. We show that Wc enhances the white-grain phenotype of y1. Analyses of Wc structure and distribution further indicate that the locus was created in maize shortly after domestication by two Tam3L transposon-mediated steps. First, a chromosome segment containing Ccd1 and several nearby genes duplicated at a position 1.9 Mb proximal to the progenitor Ccd1r locus on chromosome 9. A second interaction of Tam3L transposons at the new locus created a 28-kb tandem duplication setting up further amplification of Ccd1 copy number by unequal crossing over. In this way, transposon-mediated variation in copy number at the Wc locus created phenotypic variation that provided a foundation for breeding and selection of grain color in maize.