Single nucleotide polymorphisms (SNPs) in the KLK3 gene on chromosome 19q13.33 are associated with serum prostate-specific antigen (PSA) levels. Recent genome wide association studies of prostate cancer have yielded conflicting results for association of the same SNPs with prostate cancer risk. Since the KLK3 gene encodes the PSA protein that forms the basis for a widely used screening test for prostate cancer, it is critical to fully characterize genetic variation in this region and assess its relationship with the risk of prostate cancer. We have conducted a next-generation sequence analysis in 78 individuals of European ancestry to characterize common (minor allele frequency, MAF >1%) genetic variation in a 56 kb region on chromosome 19q13.33 centered on the KLK3 gene (chr19:56,019,829–56,076,043 bps). We identified 555 polymorphic loci in the process including 116 novel SNPs and 182 novel insertion/deletion polymorphisms (indels). Based on tagging analysis, 144 loci are necessary to tag the region at an r2 threshold of 0.8 and MAF of 1% or higher, while 86 loci are required to tag the region at an r2 threshold of 0.8 and MAF >5%. Our sequence data augments coverage by 35 and 78% as compared to variants in dbSNP and HapMap, respectively. We observed six non-synonymous amino acid or frame shift changes in the KLK3 gene and three changes in each of the neighboring genes, KLK15 and KLK2. Our study has generated a detailed map of common genetic variation in the genomic region surrounding the KLK3 gene, which should be useful for fine-mapping the association signal as well as determining the contribution of this locus to prostate cancer risk and/or regulation of PSA expression.