The overarching motivation of evolutionary ecology is to explain why natural populations harbor so much genetic and phenotypic diversity. This dissertation features two particularly important and puzzling forms of diversity: variation in reproductive mode and variation in species interactions. The ultimate conclusion of this dissertation is that host-parasite coevolution underlies variation in both. Why do females produce genetically variable offspring, via sexual outcrossing? The evolution and maintenance of sex remains one of the great enigmas of evolutionary biology. Chapter 1 lays the foundation for the problem. A combination of theory and data from semi-natural mesocosms shows that sex has a two-fold cost relative to asexual reproduction in the freshwater snail Potamopyrgus antipodarum. Yet asexual and sexual females coexist in nature. A strong selective force must therefore counterbalance the cost of sex. Previous work had shown that a sterilizing trematode, Microphallus sp., commonly infects P. antipodarum in natural populations. In Chapter 2, field surveys and experimental inoculations reveal substantial variation in both infection prevalence and in host susceptibility to local Microphallus around a single small lake. Variation in prevalence arises from variation in environmental factors and variation in susceptibility, a proxy for coevolutionary selection. Chapter 3 shows that the frequency of sexual females also varies substantially around this lake and is tightly positively correlated with susceptibility. Susceptibility can explain the majority of geographic variation in sex, far more than can infection prevalence. This result specifically points to the significance of coevolutionary selection in the maintenance of sex. Chapter 4 provides support for the Red Queen that is taxonomically and conceptually unique. Applying phylogenetic comparative methods to the nematode phylum reveals that parasitic nematode taxa are more likely to be obligately outcrossing than their free-living relatives. Variation in parasite virulence is another curious anomaly in evolutionary biology. Chapter 5 presents the results of experimental selection on reduced antagonism between a nematode host and its virulent bacterial parasite. Reduced antagonism evolved only when host and parasite were able to coevolve. This result argues that coevolution contributes to the evolution of virulence. Ultimately, this dissertation shows that coevolution lies at the root of some of evolution’s most puzzling phenomena and can explain the maintenance of genetic and phenotypic diversity in natural populations.