Functional annotation describes known or predicted roles of a DNA variant or DNA sequence’s molecular function on the expression of a trait phenotype. Since whole-genome sequencing became economical, software was developed to filter variants based on these annotations. Functional annotation has helped identify causative variants, which in turn increase prediction accuracy of genomic selection, particularly across breeds and multibreed populations. The concept of integrating functional genomics information into predictive models is not new, but its application is still limited. This chapter will describe how functional annotation has developed, if it is useful to dairy cattle breeders, provide examples of its uses in prediction research, and hypothesize how functional annotation might be exploited in breeding. There is considerable hope that whole-genome gene function information may help predict phenotypes. However, considerable research is still needed to determine if functional annotation can one day play a role in dairy breeding.