The cytochrome P450 2D6 (CYP2D6) gene locus is challenging to accurately genotype due to numerous single nucleotide variants and complex structural variation. Our goal was to determine whether the CYP2D6 genotype-phenotype correlation is improved when diplotype assignments incorporate structural variation, identified by the bioinformatics tool Stargazer, with next-generation sequencing data. Using CYP2D6 activity measured with substrates dextromethorphan and metoprolol, activity score explained 40% and 34% of variability in metabolite formation rates, respectively, when diplotype calls incorporated structural variation, increasing from 36% and 31%, respectively, when diplotypes did not incorporate structural variation. We also investigated whether the revised Clinical Pharmacogenetics Implementation Consortium (CPIC) recommendations for translating genotype to phenotype improve CYP2D6 activity predictions over the current system. Although the revised recommendations do not improve the correlation between activity score and CYP2D6 activity, perhaps because of low frequency of the CYP2D6*10 allele, the correlation with metabolizer phenotype group was significantly improved for both substrates. We also measured the function of seven rare coding variants: one (A449D) exhibited decreased (44%) and another (R474Q) increased (127%) activity compared with reference CYP2D6.1 protein. Allele-specific analysis found that A449D is part of a novel CYP2D6*4 suballele, CYP2D6*4.028. The novel haplotype containing R474Q was designated CYP2D6*138 by PharmVar; another novel haplotype containing R365H was designated CYP2D6*139. Accuracy of CYP2D6 phenotype prediction is improved when the CYP2D6 gene locus is interrogated using next-generation sequencing coupled with structural variation analysis. Additionally, revised CPIC genotype to phenotype translation recommendations provides an improvement in assigning CYP2D6 activity.