The brain-derived neurotrophic factor (BDNF) gene is critical for neuronal function and survival, and is likely to be important in psychiatric disorders. In this study, we used single-nucleotide polymorphism (SNP) discovery, functional analyses, and genetic association studies to better understand the potential role of BDNF sequence variation in behavior. Screening 480 unrelated individuals for SNPs and genotyping was performed in US Caucasian, American Indian, and African American populations. Lifetime DSM-III-R psychiatric diagnoses were assigned and the Tridimensional Personality Questionnaire (TPQ) was administered to measure anxious temperament (harm avoidance (HA)) and novelty seeking (NS). A novel SNP (-281 C>A) in promoter 1 was discovered that had decreased DNA binding in vitro and decreased basal reporter gene activity in transfected rat hippocampal neurons. The frequency of the -281 A allele was 0.03 in a Caucasian sample, but was virtually absent in other populations. Association analyses in a community-based sample showed that individuals with the -281 A allele (13 heterozygotes) had lower TPQ HA (F=4.8, p<0.05). In contrast, the Met 66 allele was associated with increased HA (F=4.1, p=0.02) and was most abundant in individuals with both anxiety disorders and major depression (p<0.05). Among the Val66Val homozygotes, individuals who were -281 CA heterozygotes had significantly lower HA than the -281 CC homozygotes (p<0.01). Our results suggest that in this population, the low activity -281 A allele may be protective against anxiety and psychiatric morbidity, whereas Met 66 may be a risk allele.