The first measurements of the transferred polarization for the exclusive [Formula presented] reaction have been performed at Jefferson Laboratory using the CLAS spectrometer. A 2.567 GeV beam was used to measure the hyperon polarization over [Formula presented] from 0.3 to [Formula presented], [Formula presented] from 1.6 to 2.15 GeV, and over the full [Formula presented] center-of-mass angular range. Comparison with predictions of hadrodynamic models indicates strong sensitivity to the underlying resonance contributions. A nonrelativistic quark-model interpretation of our data suggests that the [Formula presented] quark pair is produced with spins predominantly antialigned. Implications for the validity of the most widely used quark-pair creation operator are discussed.