Age-related macular degeneration (AMD) is a leading cause of visual impairment and blindness in the elderly whose etiology remains largely unknown. Previous studies identified chromosome 1q32 as harboring a susceptibility locus for AMD, but it was not identified. We identified a strongly associated haplotype in two independent data sets. DNA sequencing of the complement factor II gene (CFII) within this haplotype revealed a coding variant, Y402II, that significantly increases the risk for AMD with odds ratios between 2.45 and 5.57. This identifies Complement factor II as involved in pathogenesis of AMD. This single variant alone is so common that it likely explains 43 percent of AMD in older adults. In addition, we have replicated and refined previous reports implicating a coding change in LOC387715 as the second major AMD susceptibility allele. The effect of rs10490924 appears to be completely independent of the Y402H variant in the CFH gene. The joint effect of these two susceptibility genes is consistent with a multiplicative model, and together, they may explain as much as 65% of the PAR of AMD. In contrast, the effect of rs10490924 appears to be strongly modified by cigarette smoking. Smoking and LOC387715 together may explain as much as 34% of AMD. Our data indicate that variant genotypes at rs10490924 confer a substantially larger AMD risk to cigarette smokers than non-smokers. This observation is supported by traditional case-control modeling, by ordered subset linkage analysis (OSA) incorporating pack-years of cigarette smoking as a covariate, and by family-based association analysis using a more homogeneous set of families as defined by OSA.