Linear mixed models (LMMs) are a powerful and established tool for studying genotype-phenotype relationships. A limitation of the LMM is that the model assumes Gaussian distributed residuals, a requirement that rarely holds in practice. Violations of this assumption can lead to false conclusions and loss in power. To mitigate this problem, it is common practice to pre-process the phenotypic values to make them as Gaussian as possible, for instance by applying logarithmic or other nonlinear transformations. Unfortunately, different phenotypes require different transformations, and choosing an appropriate transformation is challenging and subjective. Here we present an extension of the LMM that estimates an optimal transformation from the observed data. In simulations and applications to real data from human, mouse and yeast, we show that using transformations inferred by our model increases power in genome-wide association studies and increases the accuracy of heritability estimation and phenotype prediction.