The aim of the study was to identify genetic variants predisposing to primary hip and knee osteoarthritis (OA) in a sample of Finnish families.Genome wide analysis was performed using 15 independent families (279 individuals) originating from Central Finland identified as having multiple individuals with primary hip and/or knee OA. Targeted re-sequencing was performed for three samples from one 33-member, four-generation family contributing most significantly to the LOD score. In addition, exome sequencing was performed in three family members from the same family.Genome wide linkage analysis identified a susceptibility locus on chromosome 2q21 with a multipoint LOD score of 3.91. Targeted re-sequencing and subsequent linkage analysis revealed a susceptibility insertion variant rs11446594. It locates in a predicted strong enhancer element region with maximum LOD score 3.42 under dominant model of inheritance. Insertion creates a recognition sequence for ELF3 and HMGA1 transcription factors. Their DNA-binding affinity is highly increased in the presence of A-allele compared to wild type null allele.A potentially novel functional OA susceptibility variant was identified by targeted re-sequencing. This variant locates in a predicted regulatory site and creates a recognition sequence for ELF3 and HMGA1 transcription factors that are predicted to play a significant role in articular cartilage homeostasis.