Genome-wide association studies (GWAS) have identified more than 30 prostate cancer (PrCa) susceptibility loci. One of these (rs2735839) is located close to a plausible candidate susceptibility gene, KLK3, which encodes prostate-specific antigen (PSA). PSA is widely used as a biomarker for PrCa detection and disease monitoring. To refine the association between PrCa and variants in this region, we used genotyping data from a two-stage GWAS using samples from the UK and Australia, and the Cancer Genetic Markers of Susceptibility (CGEMS) study. Genotypes were imputed for 197 and 312 single nucleotide polymorphisms (SNPs) from HapMap2 and the 1000 Genome Project, respectively. The most significant association with PrCa was with a previously unidentified SNP, rs17632542 (combined P = 3.9 × 10(-22)). This association was confirmed by direct genotyping in three stages of the UK/Australian GWAS, involving 10,405 cases and 10,681 controls (combined P = 1.9 × 10(-34)). rs17632542 is also shown to be associated with PSA levels and it is a non-synonymous coding SNP (Ile179Thr) in KLK3. Using molecular dynamic simulation, we showed evidence that this variant has the potential to introduce alterations in the protein or affect RNA splicing. We propose that rs17632542 may directly influence PrCa risk.