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We have identified and characterized an elaborate genetic system in the Lyme disease spirochete Borrelia burgdorferi that promotes extensive antigenic variation of a surface-exposed lipoprotein, VlsE. A 28 kb linear plasmid of B. burgdorferi B31 (lp28–1) was found to contain a vmp-like sequence (vls) locus that closely resembles the variable major protein (vmp) system for antigenic variation of relapsing fever organisms. Portions of several of the 15 nonexpressed (silent) vls cassette sequences located upstream of vlsE recombined into the central vlsE cassette region during infection of C3H/HeN mice, resulting in antigenic variation of the expressed lipoprotein. This combinatorial variation could potentially produce millions of antigenic variants in the mammalian host.