The relapsing fever spirochete, Borrelia hermsii , escapes immune selection by alternating expression of surface lipoprotein alleles. The switch results from a duplicative transposition of one of several surface lipoprotein-encoding nucleotide sequences into the singular expression site. These nucleotide sequences constitute a large gene family whose diversity originated, in some cases, before the major divergences of Borrelia species. We have examined the B. hermsii vsp subfamily of alleles, which are carried on linear plasmids within each cell and maintained in several diverse copies as an antigenic archive. Each encodes a distinct serotype-specific protein. We sequenced more than 90% of the alleles within a single strain— B. hermsii strain HS1. A preponderance of allelic mosaicism suggests that intragenic recombination, coupled with selection imposed by host immune response, has driven diversification of the archived ensemble of vsp alleles. The recombinational diversification of vsp alleles generates change in the associated serotypes of the magnitude (30–40% amino acid differentiation) necessary for overcoming cross-reactivity of neutralizing antibodies. We conclude that evolution of vsp has occurred by punctuated occurrence of allelic differentiation, rather than by gradual selection of incremental point mutations that do not meet the threshold for antigenic diversity.