Understanding genetic variation and its functional consequences within cis-regulatory regions remains an important challenge in human genetics and evolution. Here, we present a fine-scale functional analysis of segregating variation within the cis-regulatory region of prodynorphin, a gene that encodes an endogenous opioid precursor with roles in cognition and disease. In order to characterize the functional consequences of segregating variation in cis in a region under balancing selection in different human populations, we examined associations between specific polymorphisms and gene expression in vivo and in vitro. We identified five polymorphisms within the 5' flanking region that affect transcript abundance: a 68-bp repeat recognized in prior studies, as well as two microsatellites and two single nucleotide polymorphisms not previously implicated as functional variants. The impact of these variants on transcription differs by brain region, sex, and cell type, implying interactions between cis genotype and the differentiated state of cells. The effects of individual variants on expression level are not additive in some combinations, implying epistatic interactions between nearby variants. These data reveal an unexpectedly complex relationship between segregating genetic variation and its expression-trait consequences and highlights the importance of close functional scrutiny of natural genetic variation within even relatively well-studied cis-regulatory regions.