The G/C single-nucleotide polymorphism in the serotonin 1a receptor promoter, rs6295, has previously been linked with depression, suicide and antidepressant responsiveness. In vitro studies suggest that rs6295 may have functional effects on the expression of the serotonin 1a receptor gene (HTR1A) through altered binding of a number of transcription factors. To further explore the relationship between rs6295, mental illness and gene expression, we performed dual epidemiological and biological studies. First, we genotyped a cohort of 1412 individuals, randomly split into discovery and replication cohorts, to examine the relationship between rs6295 and five psychiatric outcomes: history of psychiatric hospitalization, history of suicide attempts, history of substance or alcohol abuse, current posttraumatic stress disorder (PTSD), current depression. We found that the rs6295G allele is associated with increased risk for substance abuse, psychiatric hospitalization and suicide attempts. Overall, exposure to either childhood or non-childhood trauma resulted in increased risk for all psychiatric outcomes, but we did not observe a significant interaction between rs6295 and trauma in modulating psychiatric outcomes. In conjunction, we also investigated the potential impact of rs6295 on HTR1A expression in postmortem human brain tissue using relative allelic expression assays. We found more mRNA produced from the C versus the G-allele of rs6295 in the prefrontal cortex (PFC), but not in the midbrain of nonpsychiatric control subjects. Further, in the fetal cortex, rs6295C allele exhibited increased relative expression as early as gestational week 18 in humans. Finally, we found that the C:G allelic expression ratio was significantly neutralized in the PFC of subjects with major depressive disorder (MDD) who committed suicide as compared with controls, indicating that normal patterns of transcription may be disrupted in MDD/suicide. These data provide a putative biological mechanism underlying the association between rs6295, trauma and mental illness. Moreover, our results suggest that rs6295 may affect transcription during both gestational development and adulthood in a region-specific manner, acting as a risk factor for psychiatric illness. These findings provide a critical framework for conceptualizing the effects of a common functional genetic variant, trauma exposure and their impact on mental health.