The primary virulence determinant of Plasmodium falciparum malaria parasite–infected cells is a family of heterogeneous surface receptors collectively referred to as PfEMP1. These proteins are encoded by a large, polymorphic gene family called var. The family contains approximately 60 individual genes, which are subject to strict, mutually exclusive expression, with the single expressed var gene determining the antigenic, cytoadherent, and virulence phenotype of the infected cell. The mutually exclusive expression pattern of var genes is imperative for the parasite's ability to evade the host's immune response and is similar to the process of “allelic exclusion” described for mammalian Ig and odorant receptor genes. In mammalian systems, mutually exclusive expression is ensured by negative feedback inhibition mediated by production of a functional protein. To investigate how expression of the var gene family is regulated, we have created transgenic lines of parasites in which expression of individual var loci can be manipulated. Here we show that no such negative feedback system exists in P. falciparum and that this process is dependent solely on the transcriptional regulatory elements immediately adjacent to each gene. Transgenic parasites that are selected to express a var gene in which the PfEMP1 coding region has been replaced by a drug-selectable marker silence all other var genes in the genome, thus effectively knocking out all PfEMP1 expression and indicating that the modified gene is still recognized as a member of the var gene family. Mutually exclusive expression in P. falciparum is therefore regulated exclusively at the level of transcription, and a functional PfEMP1 protein is not necessary for viability or for proper gene regulation in cultured parasites.