Classical studies of non-immune individuals infected with Plasmodium falciparum reveal that the infection may be regulated for long periods at a relatively stable parasite density, despite the enormous growth potential of a parasite that continually replicates within host erythrocytes. This suggests that the parasite population may be controlled by density-dependent mechanisms, and in theory the most obvious of these is competition between parasites for host erythrocytes. Here we evaluate the role of this mechanism in the regulation of parasitaemia, by modelling the basic population interaction between parasites and erythrocytes in a form that allows all the essential parameters to be estimated from clinical data. Our results show that competition cannot account for the total regulation of P. falciparum, but when combined with immune mechanisms it may play a more important role than is generally supposed. Further analysis of the model indicates that in the long term, parasite replication at low parasite densities can contribute significantly to the high degree of anaemia observed in natural infection, a conclusion which is not obvious from simple clinical observation.