Hemoglobin degradation/hemozoin formation, essential steps in the Plasmodium life cycle, are targets of existing antimalarials. The pathway still offers vast possibilities to be explored for new antimalarial discoveries. Here, we characterize heme detoxification protein, PfHDP, a major protein involved in hemozoin formation, as a novel drug target. Using in silico and biochemical approaches, we identified two heme binding sites and a hemoglobin binding site in PfHDP. Treatment of Plasmodium falciparum 3D7 parasites with peptide corresponding to the hemoglobin binding domain in PfHDP resulted in food vacuole abnormalities similar to that seen with a cysteine protease inhibitor, E-64 (I-1). Screening of compounds that bound the modeled PfHDP structure in the heme/hemoglobin-binding pockets from Maybridge Screening Collection identified a compound, ML-2, that inhibited parasite growth in a dose-dependent manner, thus paving the way for testing its potential as a new drug candidate. These results provide functional insights into the role of PfHDP in Hz formation and further suggest that PfHDP could be an important drug target to combat malaria.