Identification of cancer‐associated variants, especially those in functional regions of long noncoding RNAs (lncRNAs), has become an essential task in tumor etiology. However, the genetic function of lncRNA variants involved in bladder cancer susceptibility remains poorly understood. Herein, it is identified that the rs62483508 G > A variant in microRNA response elements (MREs) of lncRNA Bladder cancer Cell Cytoplasm‐Enriched abundant transcript 4 (BCCE4) is significantly associated with decreased bladder cancer risk (odds ratio = 0.84, P = 7.33 × 10−8) in the Chinese population (3603 cases and 4986 controls) but not in the European population. The protective genetic effect of the rs62483508 A allele is found in smokers or cigarette smoke‐related carcinogen 4‐aminobiphenyl (4‐ABP) exposure. Subsequent biological experiments reveal that the A allele of rs62483508 disrupts the binding affinity of miR‐328‐3p to facilitate USP18 from miRNA‐mediated degradation and thus specifically attenuates the downstream PD‐L1/PD‐1 interaction. LncRNA BCCE4 is also enriched in exosomes from bladder cancer plasma, tissues, and cells. This comprehensive study clarifies the genetic mechanism of lncRNA BCCE4 in bladder cancer susceptibility and its role in the regulation of the immune response in tumorigenesis. The findings provide a valuable predictor of bladder cancer risk that can facilitate diagnosis and prevention.