The hybrid pathway for heme biosynthesis in the malarial parasite proposes the involvement of parasite genome-coded enzymes of the pathway localized in different compartments such as apicoplast, mitochondria, and cytosol. However, knowledge on the functionality and localization of many of these enzymes is not available. In this study, we demonstrate that porphobilinogen deaminase encoded by the Plasmodium falciparum genome (PfPBGD) has several unique biochemical properties. Studies carried out with PfPBGD partially purified from parasite membrane fraction, as well as recombinant PfPBGD lacking N-terminal 64 amino acids expressed and purified from Escherichia coli cells (DeltaPfPBGD), indicate that both the proteins are catalytically active. Surprisingly, PfPBGD catalyzes the conversion of porphobilinogen to uroporphyrinogen III (UROGEN III), indicating that it also possesses uroporphyrinogen III synthase (UROS) activity, catalyzing the next step. This obviates the necessity to have a separate gene for UROS that has not been so far annotated in the parasite genome. Interestingly, DeltaPfP-BGD gives rise to UROGEN III even after heat treatment, although UROS from other sources is known to be heat-sensitive. Based on the analysis of active site residues, a DeltaPfPBGDL116K mutant enzyme was created and the specific activity of this recombinant mutant enzyme is 5-fold higher than DeltaPfPBGD. More interestingly, DeltaPfPBGDL116K catalyzes the formation of uroporphyrinogen I (UROGEN I) in addition to UROGEN III, indicating that with increased PBGD activity the UROS activity of PBGD may perhaps become rate-limiting, thus leading to non-enzymatic cyclization of preuroporphyrinogen to UROGEN I. PfPBGD is localized to the apicoplast and is catalytically very inefficient compared with the host red cell enzyme.