© The Author(s) 2018. Published by Oxford University Press. All rights reserved. Systemic lupus erythematosus (SLE or lupus) (OMIM: 152700) is a chronic autoimmune disease with debilitating inflammation that affects multiple organ systems. The STAT1-STAT4 locus is one of the first and most highly replicated genetic loci associated with lupus risk. We performed a fine-mapping study to identify plausible causal variants within the STAT1-STAT4 locus associated with increased lupus disease risk. Using complementary frequentist and Bayesian approaches in trans-ancestral Discovery and Replication cohorts, we found one variant whose association with lupus risk is supported across ancestries in both the Discovery and Replication cohorts: rs11889341. In B cell lines from patients with lupus and healthy controls, the lupus risk allele of rs11889341 was associated with increased STAT1 expression. We demonstrated that the transcription factor HMGA1, a member of the HMG transcription factor family with an AT-hook DNA-binding domain, has enriched binding to the risk allele compared with the non-risk allele of rs11889341.We identified a genotype-dependent repressive element in the DNA within the intron of STAT4 surrounding rs11889341. Consistent with expression quantitative trait locus (eQTL) analysis, the lupus risk allele of rs11889341 decreased the activity of this putative repressor. Altogether, we present a plausible molecular mechanism for increased lupus risk at the STAT1-STAT4 locus in which the risk allele of rs11889341, the most probable causal variant, leads to elevated STAT1 expression in B cells due to decreased repressor activity mediated by increased binding of HMGA1.