Technical Abstract: Aspergillus flavus infects both plants and animals and is of toxicological importance due to its production of aflatoxins (AFs). Recent efforts to reduce AF concentrations have focused on the use of the biocontrols AF36 and Afla-Guard®, both of which contain nonaflatoxigenic A. flavus strains as an active ingredient. Biocontrol strains are applied to fields, where they competitively exclude native aflatoxigenic strains. Although biocontrol is effective in reducing AF contamination in crops, the extent to which these strains recombine with native strains and the overall effect on fungal populations are unknown. Here we show that the recombination breakpoints in the F1 correlate with the breakpoints inferred from population genetic studies of natural isolates. Furthermore, we demonstrate that a crossover event within the AF cluster can repair a nonsense mutation, resulting in a regained aflatoxin-producing phenotype. Finally, we observed non-Mendelian inheritance of extra-genomic AF cluster alleles in crosses with partial AF cluster parents, suggesting a possible role of cryptic heterokaryosis, in addition to sexual recombination, in modulating AF production. Collectively, these processes may contribute to increased effective population sizes and drive genetic and functional hyperdiversity in A. flavus.