Falcilysin (FLN) is a zinc metalloprotease thought to degrade globin peptides in the acidic vacuole of the human malaria parasite Plasmodium falciparum. The enzyme has been found to have acidic or neutral pH optima on different peptides and to have additional distribution outside the food vacuole. These data suggested that FLN has an additional function in the parasite. To further probe the functions of FLN, we created a transgenic parasite clone expressing a chromosomally encoded FLN-GFP fusion. Unexpectedly, FLN was found in the apicoplast, an essential chloroplast-like organelle. Nuclear encoded apicoplast proteins are targeted to the organelle by a bipartite N-terminal sequence comprised of a signal sequence followed by a positively charged transit peptide domain. Free transit peptides are thought to be toxic to the plastid and need to be rapidly degraded after proteolytic release from proproteins. We hypothesized that FLN may participate in transit peptide degradation in the apicoplast based on its preference for basic residues at neutral pH and on phylogenetic comparison with other M16 family metalloproteases. In vitro cleavage by FLN of the transit peptide from the apicoplast-resident acyl carrier protein supports this idea. The importance of FLN for parasite development is suggested by our inability to truncate the chromosomal FLN open reading frame. Our work indicates that FLN is an attractive target for antimalarial development.