The fine-scale structure of the majority of copy number variation (CNV) regions remains unknown. The killer immunoglobulin receptor (KIR) gene complex exhibits significant CNV. The evolutionary plasticity of the KIRs and their broad biomedical relevance makes it important to understand how these immune receptors evolve. In this paper, we describe haplotype re-arrangement creating novel loci at the KIR complex. We completely sequenced, after fosmid cloning, two rare contracted haplotypes. Evidence of frequent hybrid KIR genes in samples from many populations suggested that re-arrangements may be frequent and selectively advantageous. We propose mechanisms for formation of novel hybrid KIR genes, facilitated by protrusive non-B DNA structures at transposon recombination sites. The heightened propensity to generate novel hybrid KIR receptors may provide a proactive evolutionary measure, to militate against pathogen evasion or subversion. We propose that CNV in KIR is an evolutionary strategy, which KIR typing for disease association must take into account.