Calcium-binding protein S100B has been implicated in the pathology of bipolar affective disorder (BPAD) and schizophrenia (SZ). S100B protein levels are elevated in serum of patients with both disorders compared to controls. We previously reported genetic association of a SNP in the promoter of S100B, rs3788266, with a psychotic form of BPAD. To test for genotypic effects of rs3788266 in vivo, S100B serum protein levels were measured in 350 Irish and German subjects of known S100B genotype. The functional effect of rs3788266 on S100B promoter activity was studied using the luciferase reporter system in U373MG glioblastoma and SH-SY5Y neuroblastoma cell lines. Allelic effects of rs3788266 on protein complex formation at the S100B promoter were investigated by an electrophoretic mobility shift assay. Higher mean serum S100B levels were associated with the risk G allele of rs3788266 in BPAD cases (P = 0.0001), unaffected relatives of BPAD cases (P < 0.0001) and unrelated controls (P < 0.0001). Consistent with the in vivo findings, luciferase gene expression was significantly increased in the presence of the G allele compared to the A allele in SH-SY5Y (P = <0.0001), and in U373MG (P = <0.0008) cell lines. The binding affinity of both SH-SY5Y and U373MG protein complexes for the S100B promoter was significantly stronger in the presence of G allele compared to the A allele promoter fragments. These data support rs3788266 as a functional promoter variant in the S100B gene where the presence of the G allele promotes increased gene expression and is associated with increased serum levels of the protein.