Improving the efficiency of malaria diagnosis is one of the main goals of current malaria research. We have recently developed a magneto-optical (MO) method which allows high-sensitivity detection of malaria pigment (hemozoin crystals) in blood via the magnetically induced rotational motion of the hemozoin crystals. Here, we evaluate this MO technique for the detection of Plasmodium falciparum in infected erythrocytes using in-vitro parasite cultures covering the entire intraerythrocytic life cycle. Our novel method detected parasite densities as low as ∼ 40 parasites per microliter of blood (0.0008% parasitemia) at the ring stage and less than 10 parasites/µL (0.0002% parasitemia) in the case of the later stages. These limits of detection, corresponding to approximately 20 pg/µL of hemozoin produced by the parasites, exceed that of rapid diagnostic tests and compete with the threshold achievable by light microscopic observation of blood smears. The MO diagnosis requires no special training of the operator or specific reagents for parasite detection, except for an inexpensive lysis solution to release intracellular hemozoin. The devices can be designed to a portable format for clinical and in-field tests. Besides testing its diagnostic performance, we also applied the MO technique to investigate the change in hemozoin concentration during parasite maturation. Our preliminary data indicate that this method may offer an efficient tool to determine the amount of hemozoin produced by the different parasite stages in synchronized cultures. Hence, it could eventually be used for testing the susceptibility of parasites to antimalarial drugs.