Variations in OPRK1, which encodes the κ-opioid receptor, are associated with the risk for alcohol dependence. Sequencing DNAs with higher and lower risk haplotypes revealed an insertion/deletion (indel) with a net addition of 830 bp located 1986 bp upstream of the translation start site (1389 bp upstream of the transcription start site). We demonstrated that the upstream region extending from −1647 to −10 bp or from −2312 to −10 bp (relative to the translation start site) could function as a promoter in transient transfection assays. We then determined that the presence of the indel reduced transcriptional activity by half. We used a PCR assay to genotype individuals in 219 multiplex alcohol-dependent families of European American descent for the presence or absence of this indel. Family-based association analyses detected significant evidence of association of this insertion with alcoholism; the longer allele (with the indel), which had lower expression, is associated with higher risk for alcoholism. This indel is, therefore, a functional regulatory variation likely to explain at least part of the association of OPRK1 with alcohol dependence.