A combination of genetic and functional approaches has identified three independent breast cancer risk loci at 2q35. A recent fine-scale mapping analysis to refine these associations resulted in 1 (signal 1), 5 (signal 2), and 42 (signal 3) credible causal variants at these loci. We used publicly available in silico DNase I and ChIP-seq data with in vitro reporter gene and CRISPR assays to annotate signals 2 and 3. We identified putative regulatory elements that enhanced cell-type-specific transcription from the IGFBP5 promoter at both signals (30- to 40-fold increased expression by the putative regulatory element at signal 2, 2- to 3-fold by the putative regulatory element at signal 3). We further identified one of the five credible causal variants at signal 2, a 1.4 kb deletion (esv3594306), as the likely causal variant; the deletion allele of this variant was associated with an average additional increase in IGFBP5 expression of 1.3-fold (MCF-7) and 2.2-fold (T-47D). We propose a model in which the deletion allele of esv3594306 juxtaposes two transcription factor binding regions (annotated by estrogen receptor alpha ChIP-seq peaks) to generate a single extended regulatory element. This regulatory element increases cell-type-specific expression of the tumor suppressor gene IGFBP5 and, thereby, reduces risk of estrogen receptor-positive breast cancer (odds ratio = 0.77, 95% CI 0.74–0.81, p = 3.1 × 10−31).