Parasite egress from infected erythrocytes and invasion of new red blood cells are essential processes for the exponential asexual replication of the malaria parasite. These two tightly coordinated events take place in less than a minute and are in part regulated and mediated by proteases. Dipeptidyl aminopeptidases (DPAPs) are papain-fold cysteine proteases that cleave dipeptides from the N-terminus of protein substrates. DPAP3 was previously suggested to play an essential role in parasite egress. However, little is known about its enzymatic activity, intracellular localization, or biological function. In this study, we recombinantly expressed DPAP3 and demonstrate that it has indeed dipeptidyl aminopeptidase activity, but contrary to previously studied DPAPs, removal of its internal prodomain is not required for activation. By combining super resolution microscopy, time-lapse fluorescence microscopy, and immunoelectron microscopy, we show that Plasmodium falciparum DPAP3 localizes to apical organelles that are closely associated with the neck of the rhoptries, and from which DPAP3 is secreted immediately before parasite egress. Using a conditional knockout approach coupled to complementation studies with wild type or mutant DPAP3, we show that DPAP3 activity is important for parasite proliferation and critical for efficient red blood cell invasion. We also demonstrate that DPAP3 does not play a role in parasite egress, and that the block in egress phenotype previously reported for DPAP3 inhibitors is due to off target or toxicity effects. Finally, using a flow cytometry assay to differentiate intracellular parasites from extracellular parasites attached to the erythrocyte surface, we show that DPAP3 is involved in the initial attachment of parasites to the red blood cell surface. Overall, this study establishes the presence of a DPAP3-dependent invasion pathway in malaria parasites.