Polymorphisms have fascinated biologists for a long time, but their genetic underpinnings often remained elusive. Here, we aimed to uncover the genetic basis of the gold/dark polymorphism that is eponymous of Midas cichlid fish (Amphilophus spp.) adaptive radiations in Nicaraguan crater lakes. While most Midas cichlids are of the melanic “dark morph”, about 10% of individuals lose their melanic pigmentation during their ontogeny and transition into a conspicuous “gold morph”. Using a new haplotype-resolved long-read assembly we discovered an 8.2kb, transposon-derived inverted repeat in an intron of an undescribed gene, which we term goldentouch in reference to the Greek myth of King Midas. The gene goldentouch is differentially expressed between morphs, likely due to structural implications of inverted repeats in both DNA and RNA (cruciform and hairpin formation). The near-perfect association with the phenotype across several independent populations suggests that this insertion likely underlies this trans-specific, stable polymorphism.