Reduced FCGR3B copy number is associated with increased risk of systemic lupus erythematosus (SLE). The five FCGR2/FCGR3 genes are arranged across two highly paralogous genomic segments on chromosome 1q23. Previous studies have suggested mechanisms for structural rearrangements at the FCGR2/FCGR3 locus and have proposed mechanisms whereby altered FCGR3B copy number predisposes to autoimmunity, but the high degree of sequence similarity between paralogous segments has prevented precise definition of the molecular events and their functional consequences. To pursue the genomic pathology associated with FCGR3B copy-number variation, we integrated sequencing data from fosmid and bacterial artificial chromosome clones and sequence-captured DNA from FCGR3B-deleted genomes to establish a detailed map of allelic and paralogous sequence variation across the FCGR2/FCGR3 locus. This analysis identified two highly paralogous 24.5 kb blocks within the FCGR2C/FCGR3B/FCGR2B locus that are devoid of nonpolymorphic paralogous sequence variations and that define the limits of the genomic regions in which nonallelic homologous recombination leads to FCGR2C/FCGR3B copy-number variation. Further, the data showed evidence of swapping of haplotype blocks between these highly paralogous blocks that most likely arose from sequential ancestral recombination events across the region. Functionally, we found by flow cytometry, immunoblotting and cDNA sequencing that individuals with FCGR3B-deleted alleles show ectopic presence of FcγRIIb on natural killer (NK) cells. We conclude that FCGR3B deletion juxtaposes the 5′-regulatory sequences of FCGR2C with the coding sequence of FCGR2B, creating a chimeric gene that results in an ectopic accumulation of FcγRIIb on NK cells and provides an explanation for SLE risk associated with reduced FCGR3B gene copy number.