Apical membrane antigen 1 (AMA1) is a conserved transmembrane adhesin of apicomplexan parasites that plays an important role in host-cell invasion. Toxoplasma gondii AMA1 (TgAMA1) is secreted onto the parasite surface and subsequently released by proteolytic cleavage within its transmembrane domain. To elucidate the function of TgAMA1 intramembrane proteolysis, we used a heterologous cleavage assay to characterize the determinants within the TgAMA1 transmembrane domain (ALIAGLAVGGVLLLALLGGGCYFA) that govern its processing. Quantitative analysis revealed that the TgAMA1(L/G) mutation enhanced cleavage by 13-fold compared with wild type. In contrast, the TgAMA1(AG/FF) mutation reduced cleavage by 30-fold, whereas the TgAMA1(GG/FF) mutation had a minor effect on proteolysis; mutating both motifs in a quadruple mutant blocked cleavage completely. We then complemented a TgAMA1 conditional knockout parasite line with plasmids expressing these TgAMA1 variants. Contrary to expectation, variants that increased or decreased TgAMA1 processing by >10-fold had no phenotypic consequences, revealing that the levels of rhomboid proteolysis in parasites are not delicately balanced. Only parasites transgenically expressing or carrying a true knock-in allele of the uncleavable TgAMA1(AG/FF+GG/FF) mutant showed a growth defect, which resulted from inhibiting invasion without perturbing intracellular replication. These data demonstrate that TgAMA1 cleavage plays a role in invasion, but refute a recently proposed model in which parasite replication within the host cell is regulated by intramembrane proteolysis of TgAMA1.