The malaria parasite Plasmodium falciparum replicates in an intraerythrocytic parasitophorous vacuole (PV). The most abundant P. falciparum PV protein, called SERA5, is essential in blood stages and possesses a papain-like domain, prompting speculation that it functions as a proteolytic enzyme. Unusually however, SERA5 possesses a Ser residue (Ser596) at the position of the canonical catalytic Cys of papain-like proteases, and the function of SERA5 or whether it performs an enzymatic role is unknown. In this study, we failed to detect proteolytic activity associated with the Ser596-containing parasite-derived or recombinant protein. However, substitution of Ser596 with a Cys residue produced an active recombinant enzyme with characteristics of a cysteine protease, demonstrating that SERA5 can bind peptides. Using targeted homologous recombination in P. falciparum, we substituted Ser596 with Ala with no phenotypic consequences, proving that SERA5 does not perform an essential enzymatic role in the parasite. We could also replace an internal segment of SERA5 with an affinity-purification tag. In contrast, using almost identical targeting constructs, we could not truncate or C-terminally tag the SERA5 gene, or replace Ser596 with a bulky Arg residue. Our findings show that SERA5 plays an indispensable but non-enzymatic role in the P. falciparum blood-stage life cycle.