Gene-gene interactions have an important role in complex human diseases. Detection of gene-gene interactions has long been a challenge due to their complexity. The standard method aiming at detecting SNP-SNP interactions may be inadequate as it does not model linkage disequilibrium (LD) among SNPs in each gene and may lose power due to a large number of comparisons. To improve power, we propose a principal component (PC)-based framework for gene-based interaction analysis. We analytically derive the optimal weight for both quantitative and binary traits based on pairwise LD information. We then use PCs to summarize the information in each gene and test for interactions between the PCs. We further extend this gene-based interaction analysis procedure to allow the use of imputation dosage scores obtained from a popular imputation software package, MACH, which incorporates multilocus LD information. To evaluate the performance of the gene-based interaction tests, we conducted extensive simulations under various settings. We demonstrate that gene-based interaction tests are more powerful than SNP-based tests when more than two variants interact with each other; moreover, tests that incorporate external LD information are generally more powerful than those that use genotyped markers only. We also apply the proposed gene-based interaction tests to a candidate gene study on high-density lipoprotein. As our method operates at the gene level, it can be applied to a genome-wide association setting and used as a screening tool to detect gene-gene interactions.