Abstract Background At the local level, malaria transmission clusters in hotspots, which may be a group of households that experience higher than average exposure to infectious mosquitoes. Active case detection often relying on rapid diagnostic tests for mass screen and treat campaigns has been proposed as a method to detect and treat individuals in hotspots. Data from a cross-sectional survey conducted in north-western Tanzania were used to examine the spatial distribution of Plasmodium falciparum and the relationship between household exposure and parasite density. Methods Dried blood spots were collected from consenting individuals from four villages during a survey conducted in 2010. These were analysed by PCR for the presence of P. falciparum, with the parasite density of positive samples being estimated by quantitative PCR. Household exposure was estimated using the distance-weighted PCR prevalence of infection. Parasite density simulations were used to estimate the proportion of infections that would be treated using a screen and treat approach with rapid diagnostic tests (RDT) compared to targeted mass drug administration (tMDA) and Mass Drug Administration (MDA). Results Polymerase chain reaction PCR analysis revealed that of the 3,057 blood samples analysed, 1,078 were positive. Mean distance-weighted PCR prevalence per household was 34.5%. Parasite density was negatively associated with transmission intensity with the odds of an infection being subpatent increasing with household exposure (OR 1.09 per 1% increase in exposure). Parasite density was also related to age, being highest in children five to ten years old and lowest in those > 40 years. Simulations of different tMDA strategies showed that treating all individuals in households where RDT prevalence was above 20% increased the number of infections that would have been treated from 43 to 55%. However, even with this strategy, 45% of infections remained untreated. Conclusion The negative relationship between household exposure and parasite density suggests that DNA-based detection of parasites is needed to provide adequate sensitivity in hotspots. Targeting MDA only to households with RDT-positive individuals may allow a larger fraction of infections to be treated. These results suggest that community-wide MDA, instead of screen and treat strategies, may be needed to successfully treat the asymptomatic, subpatent parasite reservoir and reduce transmission in similar settings.