Genetic variation at the 19q13.3 KLK locus is linked with prostate cancer susceptibility in men. The non-synonymous KLK3 single nucleotide polymorphism (SNP), rs17632542 (c.536 T > 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 mediates prostate cancer pathogenesis. The 'Thr' PSA variant leads to small subcutaneous tumours, supporting reduced prostate cancer risk. However, 'Thr' PSA also displays higher metastatic potential with pronounced osteolytic activity in an experimental metastasis in-vivo model. Biochemical characterisation of this PSA variant demonstrates markedly reduced proteolytic activity that correlates 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 have 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.