Auditory phantom percepts, such as tinnitus, are a heterogeneous condition with great interindividual variations regarding both the percept itself and its concomitants. Tinnitus causes a considerable amount of distress, with as many as 25% of affected people reporting that it interferes with their daily lives. Although previous research gives an idea about the neural correlates of tinnitus-related distress, it cannot explain why some tinnitus patients develop distress and while others are not bothered by their tinnitus. BDNF Val66Met polymorphism (rs6265) is a known risk factor for affective disorders due to its common frequency and established functionality. To elucidate, we explore the neural activation pattern of tinnitus associated with the BDNF Val66Met polymorphism using electrophysiological data to assess activity and connectivity changes. A total of 110 participants (55 tinnitus and 55 matched control subjects) were included. In this study, we validate that the BDNF Val66Met polymorphism plays an important role in the susceptibility to the clinical manifestation of tinnitus-related distress. We demonstrate that Val/Met carriers have increased alpha power in the subgenual anterior cingulate cortex that correlates with distress levels. Furthermore, distress mediates the relationship between BDNF Val66Met polymorphism and tinnitus loudness. In other words, for Val/Met carriers, the subgenual anterior cingulate cortex sends distress-related information to the parahippocampus, which likely integrates the loudness and distress of the tinnitus percept.