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The role of cholesteryl ester transfer protein (CETP) in the metabolism of high-density lipoprotein cholesterol (HDL-C) is well studied but still controversial. More recently, genome-wide association studies and meta-analyses reported the association of a promoter variant (rs3764261) with HDL-C in Caucasians and other ethnic groups. In this study, we have examined the role of genetic variation in the promoter region of CETP with HDL-C, CETP activity, coronary artery disease (CAD), CAD risk factors, and the interaction of genetic factors with environment in a unique diabetic cohort of Asian Indian Sikhs.We genotyped four variants; three tagging single nucleotide polymorphisms from promoter (rs3764261, rs12447924, rs4783961) and one intronic variant (rs708272 Taq1B) on 2431 individuals from the Sikh Diabetes study. Two variants (rs3764261 and rs708272) exhibited a strong association with HDL-C in both normoglycemic controls (β=0.12; P=9.35×10−7 for rs3764261; β=0.10, P=0.002 for rs708272) and diabetic cases (β=0.07, P=0.016 for rs3764261; β=0.08, P=0.005 for rs708272) with increased levels among minor homozygous ‘AA’ carriers. In addition, the same ‘A’ allele carriers in rs3764261 showed a significant decrease in systolic blood pressure (β=−0.08, P=0.002) in normoglycemic controls. Haplotype analysis of rs3764261, rs12447924, rs4783961, and rs708272 further revealed a significant association of ‘ATAA’ haplotype with an increased HDL-C (β=2.71, P=6.38×10−5) and ‘CTAG’ haplotype with decreased HDL–C levels (β=−1.78, P=2.5×10−2). Although there was no direct association of CETP activity and CETP polymorphisms, low CETP activity was associated with an increased risk to CAD (age, BMI, and sex-adjusted odds ratio=2.2; 95% confidence interval: 1.4–3.4; P=0.001) in this study. Our data revealed a strong interaction of rs3764261 and rs708272 for affecting the association between CETP activity and HDL–C levels (P=2.2×10−6 and P=4.4×10−4, respectively).Our results, in conjunction with earlier reports confirm low CETP activity to be associated with higher CAD risk. Although there was no direct association of CETP activity with CETP polymorphisms, our findings revealed a significant interaction between CETP variants and CETP activity for affecting HDL-C levels. These results urge a deeper evaluation of the individual genetic variation in the CETP before implementing pharmaceutical intervention of blocking CETP for preventing CAD events.