The soybean (Glycine max) seed coat has distinctive, genetically programmed patterns of pigmentation and the recessive k1 mutation can epistatically overcome the dominant I and ii alleles, which inhibit seed color by producing small interfering RNAs (siRNAs) targeting chalcone synthase (CHS) mRNAs. Small RNA sequencing of dissected regions of immature seed coats demonstrated that CHS siRNA levels cause the patterns produced by the ii and ik alleles of the I locus, which restrict pigment to the hilum or saddle region of the seed coat, respectively. To identify the K1 locus, we compared RNA-Seq data from dissected regions of two Clark isolines having similar saddle phenotypes mediated by CHS siRNAs but different genotypes (homozygous ik K1 versus homozygous ii k1). By examining differentially expressed genes, mapping information, and genome resequencing, we identified a 129-bp deletion in Glyma.11G190900 encoding Argonaute5 (AGO5), a member of the Argonaute family. Amplicon sequencing of several independent saddle pattern mutants from different genetic backgrounds revealed independent lesions affecting AGO5, thus establishing Glyma.11G190900 as the K1 locus. Non-functional AGO5 from k1 alleles leads to altered distributions of CHS siRNAs, thus explaining how the k1 mutation reverses the phenotype of the seed coat regions from yellow to pigmented, even in the presence of the normally dominant I or ii alleles.