A small 12-kb haplotype upstream of the AKT1 gene has been found to be associated with insulin resistance phenotypes. We sought to define the functional consequences of the three component polymorphic loci (rs1130214, rs10141867, rs33925946) on AKT1 and the upstream ZBTB42 gene. 5' RACE analysis of AKT1 transcripts in human skeletal muscle biopsies showed the predominant promoter to be 2.5 kb upstream of exon 2, and distinct from those promoters previously reported in rat. We then studied the effect of each of the three haplotype polymorphisms in transcriptional reporter assays in muscle, bone, and fat cell culture models, and found that each modulated enhancer and repressor activity are in a cell-specific and differentiation-specific manner. Our results in promoter assays are consistent with the human phenotype data; we found an anabolic effect on muscle and bone with increased mRNA expression of AKT1, and catabolic effect on fat with decreased expression. To test the hypothesis that rs10141867 affects transcription levels of the novel zinc finger protein ZBTB42 in vivo, we developed the allele-specific expression assay using Taqman technology to test for allelic differences within heterozygotes. The allele containing the derived polymorphism (haplotype H2) showed a 1.75-fold increase in expression in human skeletal muscle. Our data show a particularly complex effect of the component polymorphisms of a single haplotype on cells and tissues, suggesting that the coordination of different tissue-specific effects may have driven selection for the H2 haplotype. In light of the recent abundance of SNP association studies, our approach can serve as a method for exploring the biological function of polymorphisms that show significant genotype/phenotype associations.