The critical barrier in interaction analysis for next-generation sequencing (NGS) data is that the traditional pairwise interaction analysis that is suitable for common variants is difficult to apply to rare variants because of their prohibitive computational time, large number of tests and low power. The great challenges for successful detection of interactions with NGS data are (1) the demands in the paradigm of changes in interaction analysis; (2) severe multiple testing; and (3) heavy computations. To meet these challenges, we shift the paradigm of interaction analysis between two SNPs to interaction analysis between two genomic regions. In other words, we take a gene as a unit of analysis and use functional data analysis techniques as dimensional reduction tools to develop a novel statistic to collectively test interaction between all possible pairs of SNPs within two genome regions. By intensive simulations, we demonstrate that the functional logistic regression for interaction analysis has the correct type 1 error rates and higher power to detect interaction than the currently used methods. The proposed method was applied to a coronary artery disease dataset from the Wellcome Trust Case Control Consortium (WTCCC) study and the Framingham Heart Study (FHS) dataset, and the early-onset myocardial infarction (EOMI) exome sequence datasets with European origin from the NHLBI's Exome Sequencing Project. We discovered that 6 of 27 pairs of significantly interacted genes in the FHS were replicated in the independent WTCCC study and 24 pairs of significantly interacted genes after applying Bonferroni correction in the EOMI study.