The bodies of most teleost fish species are covered with specialized subepithelial structures known as scales. The scale is an epithelial appendage that differentiates from the dermal mesenchyme. Mammals, on the other hand, have no scales, but instead their bodies are covered with hair. Although their appearances are quite different, scales and hair can be considered structurally similar in that both of them are epithelial appendages distributed over the body surface in an orderly pattern. This analogy suggests that they may have the same evolutionary origin. But, to date, no molecular evidence has been presented that links scales and hair. A mutation at the rs-3 locus of medaka (Oryzias latipes) leads to almost complete loss of scales. We demonstrated that the rs-3 locus encodes ectodysplasin-A receptor (EDAR), which is required for the initiation of hair development in mammals. We identified a novel transposon inserted in the first intron of EDAR, which causes aberrant splicing. This work shows that EDAR is required for scale development in fish and suggests that it is an evolutionarily conserved molecule that is required for the development of epithelial appendages in vertebrates.