Cytochrome P450 2D6 (CYP2D6) is involved in the metabolism of 25% of clinically used drugs. Genetic polymorphisms cause substantial variation in CYP2D6 activity and serve as biomarkers guiding drug therapy. However, genotype-phenotype relationships remain ambiguous except for poor metabolizers carrying null alleles, suggesting the presence of yet unknown genetic variants. Searching for regulatory CYP2D6 polymorphisms, we find that a SNP defining the CYP2D6*2 allele, rs16947 [R296C, 17-60% minor allele frequency (MAF)], previously thought to convey normal activity, alters exon 6 splicing, thereby reducing CYP2D6 expression at least 2-fold. In addition, two completely linked SNPs (rs5758550/rs133333, MAF 13-42%) increase CYP2D6 transcription more than 2-fold, located in a distant downstream enhancer region (>100 kb) that interacts with the CYP2D6 promoter. In high linkage disequilibrium (LD) with each other, rs16947 and the enhancer SNPs form haplotypes that affect CYP2D6 enzyme activity in vivo. In a pediatric cohort of 164 individuals, rs16947 alone (minor haplotype frequency 28%) was associated with reduced CYP2D6 metabolic activity (measured as dextromethorphan/metabolite ratios), whereas rs5758550/rs133333 alone (frequency 3%) resulted in increased CYP2D6 activity, while haplotypes containing both rs16947 and rs5758550/rs133333 were similar to the wild-type. Other alleles used in biomarker panels carrying these variants such as CYP2D6*41 require re-evaluation of independent effects on CYP2D6 activity. The occurrence of two regulatory variants of high frequency and in high LD, residing on a long haplotype, highlights the importance of gene architecture, likely shaped by evolutionary selection pressures, in determining activity of encoded proteins.