Genome-wide association studies (GWAS) have repeatedly identified genetic variants associated with bone mineral density (BMD) and osteoporotic fracture in non-coding regions of C7ORF76, a poorly studied gene of unknown function. The aim of the present study was to elucidate the causality and molecular mechanisms underlying the association. We re-sequenced the genomic region in two extreme BMD groups from the BARCOS cohort of postmenopausal women to search for functionally relevant variants. Eight selected variants were tested for association in the complete cohort and 2 of them (rs4342521 and rs10085588) were found significantly associated with lumbar spine BMD and nominally associated with osteoporotic fracture. cis-eQTL analyses of these 2 SNPs, together with SNP rs4727338 (GWAS lead SNP in Estrada et al., Nat Genet. 44:491-501, 2012), performed in human primary osteoblasts, disclosed a statistically significant influence on the expression of the proximal neighbouring gene SLC25A13 and a tendency on the distal SHFM1. We then studied the functionality of a putative upstream regulatory element (UPE), containing rs10085588. Luciferase reporter assays showed transactivation capability with a strong allele-dependent effect. Finally, 4C-seq experiments in osteoblastic cell lines showed that the UPE interacted with different tissue-specific enhancers and a lncRNA (LOC100506136) in the region. In summary, this study is the first one to analyse in depth the functionality of C7ORF76 genomic region. We provide functional regulatory evidence for the rs10085588, which may be a causal SNP within the 7q21.3 GWAS signal for osteoporosis.