Neurodegenerative diseases pose an extraordinary threat to the world’s aging population, yet no disease-modifying therapies are available. Although genome-wide association studies (GWASs) have identified hundreds of risk loci for neurodegeneration, the mechanisms by which these loci influence disease risk are largely unknown. Here, we investigated the association between common genetic variants at the 7p21 locus and risk of the neurodegenerative disease frontotemporal lobar degeneration. We showed that variants associated with disease risk correlate with increased expression of the 7p21 gene TMEM106B and no other genes; co-localization analyses implicated a common causal variant underlying both association with disease and association with TMEM106B expression in lymphoblastoid cell lines and human brain. Furthermore, increases in the amount of TMEM106B resulted in increases in abnormal lysosomal phenotypes and cell toxicity in both immortalized cell lines and neurons. We then combined fine-mapping, bioinformatics, and bench-based approaches to functionally characterize all candidate causal variants at this locus. This approach identified a noncoding variant, rs1990620, that differentially recruits CTCF in lymphoblastoid cell lines and human brain to influence CTCF-mediated long-range chromatin-looping interactions between multiple cis-regulatory elements, including the TMEM106B promoter. Our findings thus provide an in-depth analysis of the 7p21 locus linked by GWASs to frontotemporal lobar degeneration, nominating a causal variant and causal mechanism for allele-specific expression and disease association at this locus. Finally, we show that genetic variants associated with risk of neurodegenerative diseases beyond frontotemporal lobar degeneration are enriched in CTCF-binding sites found in brain-relevant tissues, implicating CTCF-mediated gene regulation in risk of neurodegeneration more generally.