The SNP rs7903146 at the transcription factor 7-like 2 (TCF7L2) locus is established as the strongest known genetic marker for type 2 diabetes via genome-wide association studies. However, the functional SNPs regulating TCF7L2 expression remain unclear. Here we show that the SNP rs7074440 is a candidate functional SNP highly linked with rs7903146. A reporter plasmid with rs7074440 normal allele sequence exhibited 15-fold higher luciferase activity compared with risk allele sequence in hepatocytes, demonstrating a strong enhancer activity at rs7074440. Additionally, we identified C-FOS as an activator binding to the rs7074440 enhancer using a TFEL genome-wide screen method. Consistently, knockdown of C-FOS significantly reduced TCF7L2 expression in hepatocytes. Collectively, a novel enhancer regulating TCF7L2 expression was revealed through searching for functional SNPs. This article is protected by copyright. All rights reserved.