Abstract We argue that variance in district magnitude affects party system inflation by shaping the process of within- and cross-district coordination. First, at the stage of within-district coordination, electoral systems with large magnitude variance generate different party systems across districts, with larger districts having more fragmented party systems with a greater number of parties. Second, at the stage of cross-district coordination, district party systems dissimilar to each other make it more difficult for elites from different districts to engage in the projection of district parties onto national-level parties. This in turn leads to the inflation of the number of parties at the national level. Through numerical simulations and an observational study, we demonstrate that variance in district magnitude is positively associated with party system inflation.