Genetic variation at the 19q13.3 KLK locus is linked with prostate cancer susceptibility. The non-synonymous KLK3 SNP, rs17632542 (c.536T>C; Ile163Thr-substitution in PSA) is associated with reduced prostate cancer risk, however, the functional relevance is unknown. Here, we identify that the SNP variant-induced change in PSA biochemical activity as a previously undescribed function mediating prostate cancer pathogenesis. The ‘Thr’ PSA variant led to small subcutaneous tumours, supporting reduced prostate cancer risk. However, ‘Thr’ PSA also displayed higher metastatic potential with pronounced osteolytic activity in an experimental metastasis in-vivo model. Biochemical characterization of this PSA variant demonstrated markedly reduced proteolytic activity that correlated with differences in in-vivo tumour burden. The SNP is associated with increased risk for aggressive disease and prostate cancer-specific mortality in three independent cohorts, highlighting its critical function in mediating metastasis. Carriers of this SNP allele had reduced serum total PSA and a higher free/total PSA ratio that could contribute to late biopsy decisions and delay in diagnosis. Our results provide a molecular explanation for the prominent 19q13.3 KLK locus, rs17632542 SNP, association with a spectrum of prostate cancer clinical outcomes.