For a long time, people observed that domesticated animals seemed to possess a constellation of traits - depigmentation, floppy ears, dwarf form, and retention of juvenile characteristics - in at least some breeds, if not all the breeds. Darwin himself made particular note of it when he wrote "The Variation of Animals and Plants Under Domestication," one of his lesser known volumes. I just recently read that he noted the bit about floppy ears in "On the Origin of Species," but I must have missed that - which is easy to do, given how much he wrote!
Now in the late 1940s to late 1950s, there was a Russian named Dmitri Belyaev, who had the notion that perhaps we'd been thinking about domestication all wrong. Up until that point, many people had been thinking about it in terms of large macroscale traits that are easily measurable - size of the pup, whether it has blue eyes, or a sickle tail. The thinking went over time we selected for the traits which made dogs, which resulted in the beasts we have today. This is no doubt true, but Dmitri's insight was to think at a higher level - what if domestication happened by first selecting for broad behavioural traits - things like "Tamenes" and "lack of fear of humans." The field of behavioural ecology hadn't yet been codified, and the link between behaviour was poorly appreciated then. It can't be understated what an intuitive leap this was.
Dmitri also had the serious disadvantage of being a geneticist in the soviet era of Lysenkoism: Lysenkoism was the (erroneous) belief that acquired traits could be heritable between generations. If that smells like Lamark, you're not far off. Trofim Lysenko had the great advantage of being a ardent communist and supporter of Leninism. He was put in a position of power and influence in Soviet Russia, and Lysenkoism became the official scientific dogma of Russia for quite some time. This wouldn't have been that big of a set back except for two things. First, he was an agricultural scientist, and Trofim oversaw quite a few instances of massive crop failure. His responses were frequently pointless, and more aimed at grandstanding than anything rooted in science. Starvation was an issue. Secondly, over time the geneticists became more and more alienated. They were denounced as Bourgeois elitists (gosh, that sounds familiar...) and with Stalin's blessing, the Russians began executing several, arresting others, and merely firing still others. Dmitri was lucky not to be shot for his ideas.
The experiment was fairly straight forward: Take a large number of foxes (~150), and select the 5% most tame males, and 30% most tame females for breeding. This was repeated generation after generation, selecting for tameness by ejecting animals that showed aggression towards humans from the experiment, and ranking the remaining animals on how afraid they were of humans.
The experiment proceeded very quickly. Within a very small number of generations, animals began behaving amenably toward humans. While inbreeding was a serious concern, they calculated that inbreeding was actually rather low (2% to 7%), and without knowing a lot about fox dispersal, I would be inclined to say that's lower than wild levels. Over time, the genetic traits that lend themselves to making an animal sociable were enriched. 40 Years after the project started, most of the animals were in the "social elite" - that is to say, they actively sought out human interaction. They would wag, they would bark, they would lick human faces. Behaviourally, they never left the puppy-period of being socializable.
Curiously, after a number of generations (I believe 5, but I don't have a primary source on hand), they began to see some traits that where rarely seen in the wild become quite common among their experimental animals. The sickle tail, where the tail is turned up, drooping ears, a depigmented "star" on their forehead which appeared white, and uneven colouration. You can click on the picture to the right to enbiggen it and see the traits. That animal in the bottom right corner isn't a Border Collie - it's a fox.
The explanation for the arrival of these traits is pretty clever. I'm going to compare it to working on your boat. Let's say you want to make your boat go faster. The first thing you can do is to pluck some low hanging fruit - clean off the hull, for example. But after you do the basic, easily done things, all you have left are major alterations to either the form of the hull - maybe reshaping it - or tinkering with your outboard. When you start doing that, you start changing other characters of your boat, too. Sure, you might have souped up your honda to go real fast, but now you'll get terrible gas mileage.
Selecting for complex traits like "tameness" is a lot like messing with your boat. After you've done all the easy things, and made them as tame as you can without actually changing much, all there is left is messing with components that will effect a lot of other things. Yes, Adrenaline plays a serious role in aggression and fear, but it has precurses that play roles in hair pigment. So by fiddling with the production of adrenaline, you're also causing these changes in pigmentation.
Sadly, Dmitri didn't live long enough to see his experiment really become the blockbuster it became. He died in 1985, after seeing signs that his ideas were spot on. His views of genetics (obviously) were vindicated, and the Soviet Union began backing off Lysenkoism in the 60s. Their biological sciences program never really recovered from the expulsion and murder of people who studied evolution by natural selection. With the collapse of the Soviet Union, the group still running his experiment became hard for money, and culled quite a few animals. The remainder they subsidize by selling fully domesticated Silver Foxes as pets to the rich. I can only imagine what an animal as smart as a fox would do turned loose in someone's home - if cats can learn to turn doorknobs, imagine what a fox could do!
Photocredits: First three from Wikimedia. First two figures from Belyaev 1978. Final figure from Trut 1999. Idea from the post came when I stumbled on this while looking for DIY airconditioner blueprints.