Single nucleotide polymorphisms (SNPs) within a microRNA (miRNA) binding sites of its target gene, referred to as miRSNPs, are known to have functional consequences for cancer risk. We investigated the association between 2,169 putative miRSNPs and prostate cancer risk in a large population including 22,301 cases and 22,320 controls of European ancestry from 23 participating studies within the largest prostate cancer (PRACTICAL) Consortium. We identified 22 SNPs to be associated with risk of prostate cancer, seven of which has not been previously reported by GWAS studies. We compared the expression levels of the 16 genes harbouring 22 significant miRSNPs and found the expression of 7 genes to be deregulated in prostate cancer in a previously published dataset of 59 tumour and 28 non-tumour samples. We then validated the functional role of KLK3 rs1058205 (T>C) and MDM4 rs4245739 SNP (A>G) SNPs. We showed that miR-3162-5p has specific affinity for the KLK3 rs1058205 SNP T-allele. As KLK3 has been shown to induce anti-angiogenic effects limiting prostate cancer growth, decreased KLK3 expression induced by miR-3162-5p targeting of the T-allele represents a mechanism by which the T-allele may be associated with increased prostate cancer risk. We also found miR-191-5p and miR-887 downregulated MDM4 protein expression in C-allele containing PC3 cells but not in LNCaP cells homozygous for the A-allele. Both miRNAs also induced a decrease in metabolic activity in PC3 cells. This study is the first to demonstrate regulation of the MDM4 rs4245739 SNP C-allele by two miRNAs presenting a mechanism by which the un-targeted A-allele of the MDM4 rs4245739 SNP may be associated with increased prostate cancer risk. Findings from this large study provide evidence that an association study using comprehensive functional SNP approach such as miRSNPs can identify disease associated functional risk loci.