The protozoan parasite Toxoplasma gondii relies on post-translational modification, including proteolysis, of proteins required for recognition and invasion of host cells. We have characterized the T. gondii cysteine protease cathepsin L (TgCPL), one of five cathepsins found in the T. gondii genome. We show that TgCPL is the primary target of the compound morpholinurea-leucyl-homophenyl-vinyl sulfone phenyl (LHVS), which was previously shown to inhibit parasite invasion by blocking the release of invasion proteins from microneme secretory organelles. As shown by fluorescently labeled LHVS and TgCPL-specific antibodies, TgCPL is associated with a discrete vesicular structure in the apical region of extracellular parasites but is found in multiple puncta throughout the cytoplasm of intracellular replicating parasites. LHVS fails to label cells lacking TgCPL due to targeted disruption of the TgCPL gene in two different parasite strains. We present a structural model for the inhibition of TgCPL by LHVS based on a 2.0 A resolution crystal structure of TgCPL in complex with its propeptide. We discuss possible roles for TgCPL as a protease involved in the degradation or limited proteolysis of parasite proteins involved in invasion.