We examined patterns and putative mechanisms of sequence diversification in the merozoite surface protein-2 (MSP-2) of Plasmodium falciparum, a major dimorphic malaria vaccine candidate antigen, by analyzing 448 msp-2 alleles from all continents. We describe several nucleotide replacements, insertion and deletion events, frameshift mutations, and proliferations of repeat units that generate the extraordinary diversity found in msp-2 alleles. We discuss the role of positive selection exerted by naturally acquired type- and variant-specific immunity in maintaining the observed levels of polymorphism and suggest that this is the most likely explanation for the significant excess of nonsynonymous nucleotide replacements found in dimorphic msp-2 domains. Hybrid sequences created by meiotic recombination between alleles of different dimorphic types were observed in few (3.1%) isolates, mostly from Africa. We found no evidence for an extremely ancient origin of allelic dimorphism at the msp-2 locus, predating P. falciparum speciation, in contrast with recent findings for other surface malarial antigens.