Combination regimens that include artemisinin derivatives are recommended as first line antimalarials in most countries where malaria is endemic. However, the mechanism of action of artemisinin is not fully understood and the usefulness of this drug class is threatened by reports of decreased parasite sensitivity. We treated Plasmodium falciparum for periods of a few hours to mimic clinical exposure to the short half-life artemisinins. We found that drug treatment retards parasite growth and inhibits uptake of hemoglobin, even at sublethal concentrations. We show that potent artemisinin activity is dependent on hemoglobin digestion by the parasite. Inhibition of hemoglobinase activity with cysteine protease inhibitors, knockout of the cysteine protease falcipain-2 by gene deletion, or direct deprivation of host cell lysate, significantly decreases artemisinin sensitivity. Hemoglobin digestion is also required for artemisinin-induced exacerbation of oxidative stress in the parasite cytoplasm. Arrest of hemoglobin digestion by early stage parasites provides a mechanism for surviving short-term artemisinin exposure. These insights will help in the design of new drugs and new treatment strategies to circumvent drug resistance.