Persistent and recurrent infections by Plasmodium falciparum malaria parasites result from the ability of the parasite to undergo antigenic variation and evade host immune attack. P. falciparum parasites generate high levels of variability in gene families that comprise virulence determinants of cytoadherence and antigenic variation, such as the var genes. These genes encode the major variable parasite protein (PfEMP-1), and are expressed in a mutually exclusive manner at the surface of the erythrocyte infected by P. falciparum. Here we identify a mechanism by which var gene sequences undergo recombination at frequencies much higher than those expected from homologous crossover events alone. These recombination events occur between sub-telomeric regions of heterologous chromosomes, which associate in clusters near the nuclear periphery in asexual blood-stage parasites or in bouquet-like configurations near one pole of the elongated nuclei in sexual parasite forms. We propose that the alignment of var genes in heterologous chromosomes facilitates gene conversion and promotes the diversity of antigenic and adhesive phenotypes. The association of virulence factors with a specific nuclear subcompartment may also have implications for variation during mitotic recombination in asexual blood stages.