Abstract Transcriptome-wide association studies (TWAS), an integrative framework using expression quantitative trait loci (eQTLs) to construct proxies for gene expression, have emerged as a promising method to investigate the biological mechanisms underlying associations between genotypes and complex traits. However, challenges remain in interpreting TWAS results, especially regarding their causality implications. In this paper, we describe a new computational framework, probabilistic TWAS (PTWAS), to detect associations and investigate causal relationships between gene expression and complex traits. We use established concepts and principles from instrumental variables (IV) analysis to delineate and address the unique challenges that arise in TWAS. PTWAS utilizes probabilistic eQTL annotations derived from multi-variant Bayesian fine-mapping analysis conferring higher power to detect TWAS associations than existing methods. Additionally, PTWAS provides novel functionalities to evaluate the causal assumptions and estimate tissue- or cell-type specific causal effects of gene expression on complex traits. These features make PTWAS uniquely suited for in-depth investigations of the biological mechanisms that contribute to complex trait variation. Using eQTL data across 49 tissues from GTEx v8, we apply PTWAS to analyze 114 complex traits using GWAS summary statistics from several large-scale projects, including the UK Biobank. Our analysis reveals an abundance of genes with strong evidence of eQTL-mediated causal effects on complex traits and highlights the heterogeneity and tissue-relevance of these effects across complex traits. We distribute software and eQTL annotations to enable users performing rigorous TWAS analysis by leveraging the full potentials of the latest GTEx multi-tissue eQTL data.