In Africa, most rapid diagnostic tests (RDTs) for falciparum malaria recognize histidine-rich protein 2 antigen. Plasmodium falciparum parasites lacking histidine-rich protein 2 (pfhrp2) and 3 (pfhrp3) genes escape detection by these RDTs, but it is not known whether these deletions confer sufficient selective advantage to drive rapid population expansion. By studying blood samples from a cohort of 12,572 participants enroled in a prospective, cross-sectional survey along Ethiopia's borders with Eritrea, Sudan and South Sudan using RDTs, PCR, an ultrasensitive bead-based immunoassay for antigen detection and next-generation sequencing, we estimate that histidine-rich protein 2-based RDTs would miss 9.7% (95% confidence interval 8.5-11.1) of P. falciparum malaria cases owing to pfhrp2 deletion. We applied a molecular inversion probe-targeted deep sequencing approach to identify distinct subtelomeric deletion patterns and well-established pfhrp3 deletions and to uncover recent expansion of a singular pfhrp2 deletion in all regions sampled. We propose a model in which pfhrp3 deletions have arisen independently multiple times, followed by strong positive selection for pfhrp2 deletion owing to RDT-based test-and-treatment. Existing diagnostic strategies need to be urgently reconsidered in Ethiopia, and improved surveillance for pfhrp2 deletion is needed throughout the Horn of Africa.