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While it is often convenient to talk about a recessive allele or a dominant trait, dominance is not inherent to either an allele or its phenotype. Dominance is a relationship between two alleles of a gene and their associated phenotypes. A "dominant" allele is dominant to a particular allele of the same gene that can be inferred from the context, but it may be recessive to a third allele, and codominant to a fourth. Similarly, a "recessive" trait is a trait associated with a particular recessive allele implied by the context, but that same trait may occur in a different context where it is due to some other gene and a dominant allele.

Dominance is unrelated to the nature of the phenotype itself, that is, whether it is regarded as "normal" or "abnormal," "standard" or "nonstandard," "healthy" or "diseased," "stronger" or "weaker," or more or less extreme. A dominant or recessive allele may account for any of these trait types.

Dominance does not determine whether an allele is deleterious, neutral or advantageous. However, selection must operate on genes indirectly through phenotypes, and dominance affects the exposure of alleles in phenotypes, and hence the rate of change in allele frequencies under selection. Deleterious recessive alleles may persist in a population at low frequencies, with most copies carried in heterozygotes, at no cost to those individuals. These rare recessives are the basis for many hereditary genetic disorders.

Dominance is also unrelated to the distribution of alleles in the population. Both dominant and recessive alleles can be extremely common or extremely rare.

The molecular basis of dominance was unknown to Mendel. It is now understood that a gene locus includes a long series (hundreds to thousands) of bases or nucleotides of deoxyribonucleic acid (DNA) at a particular point on a chromosome. The central dogma of molecular biology states that "DNA makes RNA makes protein", that is, that DNA is transcribed to make an RNA copy, and RNA is translated to make a protein. In this process, different alleles at a locus may or may not be transcribed, and if transcribed may be translated to slightly different versions of the same protein (called isoforms). Proteins often function as enzymes that catalyze chemical reactions in the cell, which directly or indirectly produce phenotypes. In any diploid organism, the DNA sequences of the two alleles present at any gene locus may be identical (homozygous) or different (heterozygous). Even if the gene locus is heterozygous at the level of the DNA sequence, the proteins made by each allele may be identical. In the absence of any difference between the protein products, neither allele can be said to be dominant (see co-dominance, above). Even if the two protein products are slightly different (allozymes), it is likely that they produce the same phenotype with respect to enzyme action, and again neither allele can be said to be dominant.

Dominance typically occurs when one of the two alleles is non-functional at the molecular level, that is, it is not transcribed or else does not produce a functional protein product. This can be the result of a mutation that alters the DNA sequence of the allele.^{[citation needed]} An organism homozygous for the non-functional allele will generally show a distinctive phenotype, due to the absence of the protein product. For example, in humans and other organisms, the unpigmented skin of the albino phenotype results when an individual is homozygous for an allele that encodes a non-functional version of an enzyme needed to produce the skin pigment melanin. It is important to understand that it is not the lack of function that allows the allele to be described as recessive: this is the interaction with the alternative allele in the heterozygote. Three general types of interaction are possible:

1. In the typical case, the single functional allele makes sufficient protein to produce a phenotype identical to that of the homozygote: this is called haplosufficiency. For example, suppose the standard amount of enzyme produced in the functional homozygote is 100%, with the two functional alleles contributing 50% each. The single functional allele in the heterozygote produces 50% of the standard amount of enzyme, which is sufficient to produce the standard phenotype. If the heterozygote and the functional-allele homozygote have identical phenotypes, the functional allele is dominant to the non-functional allele. This occurs at the albino gene locus: the heterozygote produces sufficient enzyme to convert the pigment precursor to melanin, and the individual has standard pigmentation.
2. Less commonly, the presence of a single functional allele gives a phenotype that is not normal but less severe than that of the non-functional homozygote. This occurs when the functional allele is not haplo-sufficient. The terms haplo-insufficiency and incomplete dominance are typically applied to these cases. The intermediate interaction occurs where the heterozygous genotype produces a phenotype intermediate between the two homozygotes. Depending on which of the two homozygotes the heterozygote most resembles, one allele is said to show incomplete dominance over the other. For example, in humans the Hb gene locus is responsible for the Beta-chain protein (HBB) that is one of the two globin proteins that make up the blood pigment hemoglobin. Many people are homozygous for an allele called Hb^A; some persons carry an alternative allele called Hb^S, either as homozygotes or heterozygotes. The hemoglobin molecules of Hb^S/Hb^S homozygotes undergo a change in shape that distorts the morphology of the red blood cells, and causes a severe, life-threatening form of anemia called sickle-cell anemia. Persons heterozygous Hb^A/Hb^S for this allele have a much less severe form of anemia called sickle-cell trait. Because the disease phenotype of Hb^A/Hb^S heterozygotes is more similar to but not identical to the Hb^A/Hb^A homozygote, the Hb^A allele is said to be incompletely dominant to the Hb^S allele.
3. Rarely, a single functional allele in the heterozygote may produce insufficient gene product for any function of the gene, and the phenotype resembles that of the homozygote for the non-functional allele. This complete haploinsufficiency is very unusual. In these cases, the non-functional allele would be said to be dominant to the functional allele. This situation may occur when the non-functional allele produces a defective protein that interferes with the proper function of the protein produced by the standard allele. The presence of the defective protein "dominates" the standard protein, and the disease phenotype of the heterozygote more closely resembles that of the homozygote for two defective alleles. The term "dominant" is often incorrectly applied to defective alleles whose homozygous phenotype has not been examined, but which cause a distinct phenotype when heterozygous with the normal allele. This phenomenon occurs in a number of trinucleotide repeat diseases, one example being Huntington's disease.

Many proteins are normally active in the form of a multimer, an aggregate of multiple copies of the same protein, otherwise known as a homomultimeric protein or homooligomeric protein. In fact, a majority of the 83,000 different enzymes from 9800 different organisms in the BRENDA Enzyme Database represent homooligomers. When the wild-type version of the protein is present along with a mutant version, a mixed multimer can be formed. A mutation that leads to a mutant protein that disrupts the activity of the wild-type protein in the multimer is a dominant-negative mutation.

A dominant-negative mutation may arise in a human somatic cell and provide a proliferative advantage to the mutant cell, leading to its clonal expansion. For instance, a dominant-negative mutation in a gene necessary for the normal process of programmed cell death (Apoptosis) in response to DNA damage can make the cell resistant to apoptosis. This will allow proliferation of the clone even when excessive DNA damage is present. Such dominant-negative mutations occur in the tumor suppressor gene p53. The P53 wild-type protein is normally present as a four-protein multimer (oligotetramer). Dominant-negative p53 mutations occur in a number of different types of cancer and pre-cancerous lesions (e.g. brain tumors, breast cancer, oral pre-cancerous lesions and oral cancer).

Dominant-negative mutations also occur in other tumor suppressor genes. For instance two dominant-negative germ line mutations were identified in the Ataxia telangiectasia mutated (ATM) gene which increases susceptibility to breast cancer. Dominant negative mutations of the transcription factor C/EBPα can cause acute myeloid leukemia. Inherited dominant negative mutations can also increase the risk of diseases other than cancer. Dominant-negative mutations in Peroxisome proliferator-activated receptor gamma (PPARγ) are associated with severe insulin resistance, diabetes mellitus and hypertension.

Dominant-negative mutations have also been described in organisms other than humans. In fact, the first study reporting a mutant protein inhibiting the normal function of a wild-type protein in a mixed multimer was with the bacteriophage T4 tail fiber protein GP37. Mutations that produce a truncated protein rather than a full-length mutant protein seem to have the strongest dominant-negative effect in the studies of P53, ATM, C/EBPα, and bacteriophage T4 GP37.

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