The incubation period for malaria parasites within the mosquito is exquisitely temperature-sensitive, so that temperature is a major determinant of malaria risk. Epidemiological models are increasingly used to guide allocation of disease control resources and to assess the likely impact of climate change on global malaria burdens. Temperature-based malaria transmission is generally incorporated into these models using mean monthly temperatures, yet temperatures fluctuate throughout the diurnal cycle. Here we use a thermodynamic malaria development model to demonstrate that temperature fluctuation can substantially alter the incubation period of the parasite, and hence malaria transmission rates. We find that, in general, temperature fluctuation reduces the impact of increases in mean temperature. Diurnal temperature fluctuation around means >21 degrees C slows parasite development compared with constant temperatures, whereas fluctuation around <21 degrees C speeds development. Consequently, models which ignore diurnal variation overestimate malaria risk in warmer environments and underestimate risk in cooler environments. To illustrate the implications further, we explore the influence of diurnal temperature fluctuation on malaria transmission at a site in the Kenyan Highlands. Based on local meteorological data, we find that the annual epidemics of malaria at this site cannot be explained without invoking the influence of diurnal temperature fluctuation. Moreover, while temperature fluctuation reduces the relative influence of a subtle warming trend apparent over the last 20 years, it nonetheless makes the effects biologically more significant. Such effects of short-term temperature fluctuations have not previously been considered but are central to understanding current malaria transmission and the consequences of climate change.