Two recent genome-wide association studies of East Asian populations revealed three genetic variants in WDFY4/LRRC18 associated with systemic lupus erythematosus (SLE). To identify the gene contributing to this disease susceptibility, we examined the mRNA expression of WDFY4 and LRRC18 in patients with SLE and healthy controls. WDFY4 was significantly downregulated in SLE patients as compared with controls. We used allelic expression and dual-luciferase assays to identify the functional variant. Transcriptional activity was lower for the rs877819A than -G allele. Electrophoretic mobility shift and supershift assays revealed that the transcription factor Yinyang1 (YY1) binds to rs877819, with lower affinity to the A allele, which explained the reduced transcriptional activity. This effect was further confirmed by YY1 small interfering RNA knockdown, overexpression and chromatin immunoprecipitation experiments. rs877819 in WDFY4 might be the functional site associated with SLE by reduced binding of YY1 and downregulating WDFY4 expression.