BACKGROUND: Canine atopic dermatitis (CAD) is a chronic inflammatory skin disease triggered by allergic reactions involving IgE antibodies directed towards environmental allergens. We previously identified a ~1.5 Mb locus on canine chromosome 27 associated with CAD in German shepherd dogs (GSDs). Fine-mapping indicated association closest to the PKP2 gene encoding plakophilin 2. RESULTS: Additional genotyping and association analyses in GSDs combined with control dogs from five breeds with low-risk for CAD revealed the top SNP 27:19,086,778 (p = 1.4 × 10(-7)) and a rare ~48 kb risk haplotype overlapping the PKP2 gene and shared only with other high-risk CAD breeds. We selected altogether nine SNPs (four top-associated in GSDs and five within the ~48 kb risk haplotype) that spanned ~280 kb forming one risk haplotype carried by 35 % of the GSD cases and 10 % of the GSD controls (OR = 5.1, p = 5.9 × 10(-5)), and another haplotype present in 85 % of the GSD cases and 98 % of the GSD controls and conferring a protective effect against CAD in GSDs (OR = 0.14, p = 0.0032). Eight of these SNPs were analyzed for transcriptional regulation using reporter assays where all tested regions exerted regulatory effects on transcription in epithelial and/or immune cell lines, and seven SNPs showed allelic differences. The DNA fragment with the top-associated SNP 27:19,086,778 displayed the highest activity in keratinocytes with 11-fold induction of transcription by the risk allele versus 8-fold by the control allele (pdifference = 0.003), and also mapped close (~3 kb) to an ENCODE skin-specific enhancer region. CONCLUSIONS: Our experiments indicate that multiple CAD-associated genetic variants located in cell type-specific enhancers are involved in gene regulation in different cells and tissues. No single causative variant alone, but rather multiple variants combined in a risk haplotype likely contribute to an altered expression of the PKP2 gene, and possibly nearby genes, in immune and epithelial cells, and predispose GSDs to CAD.