Parasites infect hosts in widely varying environments, encountering diverse challenges for adaptation. To identify malaria parasite genes under locally divergent selection across a large endemic region with a wide spectrum of transmission intensity, genome sequences were obtained from 284 clinical Plasmodium falciparum infections from four newly sampled locations in Senegal, The Gambia, Mali and Guinea. Combining these with previous data from seven other sites in West Africa enabled a multi-population analysis to identify discrete loci under varying local selection. A genome-wide scan showed the most exceptional geographical divergence to be at the early gametocyte gene locus gdv1 which is essential for parasite sexual development and transmission. We identified a major structural dimorphism with alternative 1.5 kb and 1.0 kb sequence deletions at different positions of the 3'-intergenic region, in tight linkage disequilibrium with the most highly differentiated single nucleotide polymorphism, one of the alleles being very frequent in Senegal and The Gambia but rare in the other locations. Long non-coding RNA transcripts were previously shown to include the entire antisense of the gdv1 coding sequence and the portion of the intergenic region with allelic deletions, suggesting adaptive regulation of parasite sexual development and transmission in response to local conditions.