Lumbar disc disease (LDD) is caused by degeneration of intervertebral discs of the lumbar spine. One of the most common musculoskeletal disorders, LDD has strong genetic determinants. Using a case-control association study, we identified a functional SNP (1184T --> C, resulting in the amino acid substitution I395T) in CILP, which encodes the cartilage intermediate layer protein, that acts as a modulator of LDD susceptibility. CILP was expressed abundantly in intervertebral discs, and its expression increased as disc degeneration progressed. CILP colocalized with TGF-beta1 in clustering chondrocytes and their territorial matrices in intervertebral discs. CILP inhibited TGF-beta1-mediated induction of cartilage matrix genes through direct interaction with TGF-beta1 and inhibition of TGF-beta1 signaling. The susceptibility-associated 1184C allele showed increased binding and inhibition of TGF-beta1. Therefore, we conclude that the extracellular matrix protein CILP regulates TGF-beta signaling and that this regulation has a crucial role in the etiology and pathogenesis of LDD. Our study also adds to the list of connective tissue diseases that are associated with TGF-beta.