The objective of this study was to apply reaction norm models to milk recording data to investigate genetic variation in and environmental sensitivity of susceptibility to milk fat depression (MFD). Data comprised 556,276 test-day records of 80,493 heifers in 1043 herds. Breeding values and genetic variances for fat percentage and fat yield were estimated by applying random regression models to average herd-test-day fat percentage. Genetic and permanent environmental correlations between fat yield expressed in different environments ranged, respectively, from 0.83 to 1.00 and from 0.29 to 1.00. Genetic and permanent environmental correlations between fat percentage expressed in different environments ranged, respectively, from 0.87 to 1.00 and from -0.05 to 0.99. Two traits were defined for MFD. The first trait reflected variation of milk fat percentage of animals within lactation after correction for year-season, herd-test-day, age-at-calving, and stage-of-lactation. This trait had an estimated heritability of about 5% and a genetic correlation between the fifth and 95th percentile of the data of 0.50. The second trait reflected the deviation of an animal's fat percentage on a test-day from its expected fat percentage based on fat percentage on the first test-day. This trait had an estimated heritability of about 4% and a genetic correlation between the fifth and 95th percentile of the data of 0.43. The correlation between estimated breeding values of sires for the 2 MFD traits was -0.3. Our results suggest that genetic variation in susceptibility to MFD is present and that selection for reduced susceptibility to MFD is possible.