Multiple intergenic single-nucleotide polymorphisms (SNPs) near hedgehog interacting protein (HHIP) on chromosome 4q31 have been strongly associated with pulmonary function levels and moderate-to-severe chronic obstructive pulmonary disease (COPD). However, whether the effects of variants in this region are related to HHIP or another gene has not been proven. We confirmed genetic association of SNPs in the 4q31 COPD genome-wide association study (GWAS) region in a Polish cohort containing severe COPD cases and healthy smoking controls (P = 0.001 to 0.002). We found that HHIP expression at both mRNA and protein levels is reduced in COPD lung tissues. We identified a genomic region located ∼85 kb upstream of HHIP which contains a subset of associated SNPs, interacts with the HHIP promoter through a chromatin loop and functions as an HHIP enhancer. The COPD risk haplotype of two SNPs within this enhancer region (rs6537296A and rs1542725C) was associated with statistically significant reductions in HHIP promoter activity. Moreover, rs1542725 demonstrates differential binding to the transcription factor Sp3; the COPD-associated allele exhibits increased Sp3 binding, which is consistent with Sp3's usual function as a transcriptional repressor. Thus, increased Sp3 binding at a functional SNP within the chromosome 4q31 COPD GWAS locus leads to reduced HHIP expression and increased susceptibility to COPD through distal transcriptional regulation. Together, our findings reveal one mechanism through which SNPs upstream of the HHIP gene modulate the expression of HHIP and functionally implicate reduced HHIP gene expression in the pathogenesis of COPD.