There is typically considerable variation in the level of infectivity of parasites and the degree of resistance of hosts within populations. This trait variation is critical not only to the evolutionary dynamics but also to the epidemiology, and potentially the control of infectious disease. However, we lack an understanding of the processes that generate and maintain this trait diversity. We examine theoretically how epidemiological feedbacks and the characteristics of the interaction between host types and parasites strains determine the coevolution of host–parasite diversity. The interactions include continuous characterizations of the key phenotypic features of classic gene-for-gene and matching allele models. We show that when there are costs to resistance in the hosts and infectivity in the parasite, epidemiological feedbacks may generate diversity but this is limited to dimorphism, often of extreme types, in a broad range of realistic infection scenarios. For trait polymorphism, there needs to be both specificity of infection between host types and parasite strains as well as incompatibility between particular strains and types. We emphasize that although the high specificity is well known to promote temporal “Red Queen” diversity, it is costs and combinations of hosts and parasites that cannot infect that will promote static trait diversity.