breed of horses favored by Indian tribes in U.S. West, 1849, either from Opelousa (perhaps from Choctaw api losa "black body") in Louisiana, or from the name of the Palouse Indians, who lived near the river of that name in Idaho, whose name is from Sahaptin palou:s "what is standing up in the water."

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Definitions of Appaloosa from WordNet

Appaloosa (n.)
a hardy breed of saddle horse developed in western North America and characteristically having a spotted rump;