Colour dilution makes the basic colour paler; the following colour diluting factors have been described:

• Dun factor (gene D)
• Cream factor (gene Cr)
• Champagne factor (gene Ch)
• Silver factor (gene Z)

Dun factor (D)

Horses with this gene have a coat colour that is lighter than their basic colour family. The gene affects both red and black pigments, but does not affect the hair of the mane, tail and distal limbs. This gene has a dominant inheritance (one dun gene has the same effect as two).

• The basic colour of the bay turns into a pale yellow brown, the result is known as dun.
• The basic colour black turns grey, mane and tail stay black, the result is known as blue dun or grullo.
• The basic colour chestnut turns into a pale yellow/reddish brown known as a red dun. In addition to the paler coat colour, horses with this dilution gene always have a more or less prominent dorsal stripe and occasionally zebra stripes on their limbs.

Cream factor (Cr)

This dilution gene also makes the basic colour lighter; however, it mainly affects the red pigments. It affects both the hair of the coat and the hair of the mane and tail, particularly in chestnuts. It has an incompletely dominant inheritance, meaning that a horse with two Cr genes will be lighter than a horse with one Cr gene.

Cream factor (Cr)

• The basic colour bay turns to buckskin when one Cr gene is present and to perlino if two Cr genes are present. The lack of a dorsal stripe differentiates between a buckskin and a dun. 
• The basic colour black is less affected, one Cr gene results in a smoky black, which can be difficult to differentiate from a brown horse. 2 Cr genes results in a smoky cream.
• In the basic colour chestnut, one Cr gene results in a dilution to a pale yellow, the mane and tail usually become even paler, this is known as palomino, two Cr genes turn a chestnut into a cremello.

Horses with two cream genes, particularly when the basic colour is bay or chestnut, have a pale skin and blue eyes. These horses may therefore also be referred to by the term blue eyed cream (BEC). Horses with one Cr gene keep a normal, dark skin.

The perlino and smoky cream horses with a bay or a black basic colour can usually be differentiated from the cremello horses (chestnut base) by the slight orange tint to the mane and tail.

Champagne factor (Ch)

This is another dominant diluting factor that affects all basic colours and lightens both red and black pigment. The hair of the coat is most affected, mane and tail are affected to a lesser extent. The most notable characteristic is the lighter colour of the skin and eyes (which are generally honey coloured to pale brown rather than blue).

• The basic colour bay turns into an amber champagne with a gold coloured body and brown mane, tail and points.
• The basic colour black turns into a classic champagne with brownish yellow body and brown mane, tail and points. There may be darker spots known as reverse dappling.
• The basic colour chestnut turns into a gold champagne which looks the same as a palomino but with paler skin and eyes.

Silver or silver dapple gene (Z)

This dilution factor affects only black pigment, and it affects the mane and tail to a greater extent than the hair of the coat. It is a dominant gene that is not present in all breeds, prominent examples of breeds with this colour gene are Icelandic horses, Shetland ponies and Rocky Mountain Horses.

Silver or silver dapple gene (Z)

In horses with the basic colour bay, the coat is lightened to a varying extent (depending on how much black pigment was there in the first place – the red pigment is unaffected), mane and tail can be cream to white. The result is known as bay or red silver.

In horses with the basic colour black, the body may turn to a chocolate brown colour, mane and tail turn to white or cream. The coat generally shows a strong dappling and is known as black, classic or chocolate silver.

In horses with the basic colour chestnut, there is no change, because there is no black pigment to modify (even in liver chestnuts).