Inflammation, which is directly regulated by interleukin-6 (IL-6) signaling, is implicated in the etiology of several chronic diseases. Although a common, non-synonymous variant in the IL-6 receptor gene (IL6R Asp358Ala; rs2228145 A>C) is associated with the risk of several common diseases, with the 358Ala allele conferring protection from coronary heart disease (CHD), rheumatoid arthritis (RA), atrial fibrillation (AF), abdominal aortic aneurysm (AAA), and increased susceptibility to asthma, the variant's effect on IL-6 signaling is not known. Here we provide evidence for the association of this non-synonymous variant with the risk of type 1 diabetes (T1D) in two independent populations and confirm that rs2228145 is the major determinant of the concentration of circulating soluble IL-6R (sIL-6R) levels (34.6% increase in sIL-6R per copy of the minor allele 358Ala; rs2228145 [C]). To further investigate the molecular mechanism of this variant, we analyzed expression of IL-6R in peripheral blood mononuclear cells (PBMCs) in 128 volunteers from the Cambridge BioResource. We demonstrate that, although 358Ala increases transcription of the soluble IL6R isoform (P = 8.3×10⁻²²) and not the membrane-bound isoform, 358Ala reduces surface expression of IL-6R on CD4+ T cells and monocytes (up to 28% reduction per allele; P≤5.6×10⁻²²). Importantly, reduced expression of membrane-bound IL-6R resulted in impaired IL-6 responsiveness, as measured by decreased phosphorylation of the transcription factors STAT3 and STAT1 following stimulation with IL-6 (P≤5.2×10⁻⁷). Our findings elucidate the regulation of IL-6 signaling by IL-6R, which is causally relevant to several complex diseases, identify mechanisms for new approaches to target the IL-6/IL-6R axis, and anticipate differences in treatment response to IL-6 therapies based on this common IL6R variant.