Genetic exchange has not been shown to be a mechanism underlying the extensive diversity of Leishmania parasites. We report here evidence that the invertebrate stages of Leishmania are capable of having a sexual cycle consistent with a meiotic process like that described for African trypanosomes. Hybrid progeny were generated that bore full genomic complements from both parents, but kinetoplast DNA maxicircles from one parent. Mating occurred only in the sand fly vector, and hybrids were transmitted to the mammalian host by sand fly bite. Genetic exchange likely contributes to phenotypic diversity in natural populations, and analysis of hybrid progeny will be useful for positional cloning of the genes controlling traits such as virulence, tissue tropism, and drug resistance.