The ROP16 kinase of Toxoplasma gondii is injected into the host cell cytosol where it activates signal transducer and activator of transcription (STAT)-3 and STAT6. Here, we generated a ROP16 deletion mutant on a Type I parasite strain background, as well as a control complementation mutant with restored ROP16 expression. We investigated the biological role of the ROP16 molecule during T. gondii infection. Infection of mouse bone marrow-derived macrophages with rop16-deleted (ΔROP16) parasites resulted in increased amounts of IL-12p40 production relative to the ROP16-positive RH parental strain. High level IL-12p40 production in ΔROP16 infection was dependent on the host cell adaptor molecule MyD88, but surprisingly was independent of any previously recognized T. gondii triggered pathway linking to MyD88 (TLR2, TLR4, TLR9, TLR11, IL-1ß and IL-18). In addition, ROP16 was found to mediate the suppressive effects of Toxoplasma on LPS-induced cytokine synthesis in macrophages and on IFN-γ-induced nitric oxide production by astrocytes and microglial cells. Furthermore, ROP16 triggered synthesis of host cell arginase-1 in a STAT6-dependent manner. In fibroblasts and macrophages, failure to induce arginase-1 by ΔROP16 tachyzoites resulted in resistance to starvation conditions of limiting arginine, an essential amino acid for replication and virulence of this parasite. ΔROP16 tachyzoites that failed to induce host cell arginase-1 displayed increased replication and dissemination during in vivo infection. We conclude that encounter between Toxoplasma ROP16 and the host cell STAT signaling cascade has pleiotropic downstream effects that act in multiple and complex ways to direct the course of infection.