A functional candidate gene approach was used to search for genes affecting milk production traits in Holstein dairy cattle. Signal transducer and activator of transcription 1 (STAT1) was chosen because of its involvement in the development of the mammary gland. Using the pooled genomic DNA sequencing approach, we identified a single nucleotide polymorphism. Genomic DNA was extracted from 1,292 sons obtained from the Cooperative Dairy DNA Repository and from 715 blood samples of daughters of 12 bulls obtained from the University of Wisconsin resource population. Daughter yield deviation data for the sons and yield deviation for the daughters were obtained for milk production traits from the USDA Animal Improvement Programs Laboratory. For the Repository population, allele C was associated with significant increases in milk fat and protein percentages. For the University of Wisconsin population, genotypes CC and CT were associated with significant increases in milk, fat, and protein yields. Results from this study are consistent with previous studies on the role of STAT1 in regulating the transcription of genes involved in milk protein synthesis and fat metabolism.