Reciprocal-transplant experiments have proven to be a powerful tool for detecting local adaptation (LA). More recently, reciprocal cross-inoculation experiments have been used to evaluate adaptation by parasites to their local host populations. These experiments are conceptually similar to reciprocal-transplant experiments, except that the “environment” (the host population) may have evolved in response to changes in the parasite population. Here, I use analytical tools and computer simulations to determine when parasites would be expected to be more infective to their local host populations than to allopatric host populations. The models assume that parasites have to genetically “match” their hosts in order to infect. I also assumed that different host clones were favored in different populations. When parasite virulence was low, clonal selection outweighed parasite-mediated selection, leading to low host diversity within populations and strong LA by parasites. At intermediate levels of virulence, parasite-mediated selection maintained high levels of host diversity within populations, which reduced or eliminated parasite LA. The loss of parasite LA was not associated with increased infectivity by parasites on allopatric hosts. Instead, the loss of LA was due to a reduction in infectivity of parasites on sympatric hosts. Finally, at high levels of parasite virulence, parasite-mediated selection led to oscillatory host dynamics and weak local adaption by parasites. Across all levels of virulence, the strength of parasite LA closely tracked the degree of host population structure (GST).