Endoperoxide antimalarials based on the ancient Chinese drug Qinghaosu (artemisinin) are currently our major hope in the fight against drug-resistant malaria. Rational drug design based on artemisinin and its analogues is slow as the mechanism of action of these antimalarials is not clear. Here we report that these drugs, at least in part, exert their effect by interfering with the plasmodial hemoglobin catabolic pathway and inhibition of heme polymerization. In an in vitro experiment we observed inhibition of digestive vacuole proteolytic activity of malarial parasite by artemisinin. These observations were further confirmed by ex vivo experiments showing accumulation of hemoglobin in the parasites treated with artemisinin, suggesting inhibition of hemoglobin degradation. We found artemisinin to be a potent inhibitor of heme polymerization activity mediated by Plasmodium yoelii lysates as well as Plasmodium falciparum histidine-rich protein II. Interaction of artemisinin with the purified malarial hemozoin in vitro resulted in the concentration-dependent breakdown of the malaria pigment. Our results presented here may explain the selective and rapid toxicity of these drugs on mature, hemozoin-containing, stages of malarial parasite. Since artemisinin and its analogues appear to have similar molecular targets as chloroquine despite having different structures, they can potentially bypass the quinoline resistance machinery of the malarial parasite, which causes sublethal accumulation of these drugs in resistant strains.