Selection for yellow and white grain types has been central to post-domestication improvement of maize. While genetic control of carotenoid biosynthesis in endosperm is attributed primarily to the Yellow1 (Y1) phytoene synthase gene, less is known about the role of the dominant white endosperm factor White Cap (Wc). We show that the Wc locus contains multiple, tandem copies of a Carotenoid cleavage dioxygenase 1 (Ccd1) gene that encodes a carotenoid-degrading enzyme. A survey of 111 maize inbreds and landraces, together with 21 teosinte accessions reveals that Wc is exclusive to maize, where it is prevalent in white-grain (y1) varieties. Moreover, Ccd1 copy number varies extensively among Wc alleles (from 1 to 23 copies), and confers a proportional range of Ccd1 expression in diverse organs. We propose that this dynamic source of quantitative variation in Ccd1 expression was created in maize shortly after domestication by a two-step, Tam3L transposon-mediated process. 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. Second, a subsequent interaction of Tam3L transposons at the new locus created a 28-kb tandem duplication, setting up expansion 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 white grain color in maize.