During invasion of an erythrocyte by a malaria merozoite, an indentation develops in the erythrocyte surface at the point of contact between the two cells. This indentation deepens as invasion progresses, until the merozoite is completely surrounded by a membrane known as the parasitophorous vacuole membrane (PVM). We incorporated fluorescent lipophilic probes and phospholipid analogs into the erythrocyte membrane, and followed the fate of these probes during PVM formation with low-light-level video fluorescence microscopy. The concentration of probe in the forming PVM was indistinguishable from the concentration of probe in the erythrocyte membrane, suggesting that the lipids of the PVM are continuous with and derived from the host cell membrane during invasion. In contrast, fluorescently labeled erythrocyte surface proteins were largely excluded from the forming PVM. These data are consistent with a model for PVM formation in which the merozoite induces a localized invagination in the erythrocyte lipid bilayer, concomitant with a localized restructuring of the host cell cytoskeleton.