Australian farmers are being urged to report any particularly ugly sheep of the prized merino variety so scientists can improve the quality of wool.
Australia's wool industry is worth about A$2.8bn
Scientists say the "random genetic mistakes" in ugly lambs can speed up the search for the genes critical in good wool making.
The "Xtreme sheep" campaign was launched after only 10 ugly lambs were spotted in this year's lambing season.
Australia's wool industry is worth about A$2.8bn (£1.1bn; $2.1bn).
The South Australian Research and Development Institute (Sardi) believes the ugly lambs could be key to securing the industry's competitiveness.
Sardi project leader Simon Bawden said lambs with "extreme and even undesirable features" can help unlock the merino's genetic library and "identify superior wool qualities".
The ugly markers include falling clumps of wool, wrinkled skin, odd fibres or no wool at all.
Sardi believes the lambs may be quickly culled, leading to the few sightings in this year's April-September lambing season.
"Before sending them to the abattoir, we'd like farmers to talk to us first," Dr Bawden said.
He said that by using DNA technology, scientists could help give wool more advantages in the competition with synthetic fibres by making it less scratchy and more shiny and stretchy.