In the human malaria parasite, Plasmodium falciparum, a DNA rearrangement is associated with erroneous transcription of the early gametocyte antigen gene, Pfg27/25, and the failure of the blood stages to differentiate into gametocytes. Altered blood stage-specific patterns of mRNA accumulation were observed for the Pfg27/25 gene, in mutant P. falciparum parasites that have lost the capacity to differentiate sexually. Each mutant demonstrates a DNA rearrangement upstream of the coding sequence. The location of the gene proximal breakpoint correlates with the complete absence of stable Pfg27/25 transcripts or with the accumulation of aberrant Pfg27/25 mRNAs in the asexual stages. The rearrangement identifies a labile region of the genome which contributes to accurate stage-specific Pfg27/25 gene transcription and may be necessary for a critical early step in sexual differentiation.