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Arginine metabolism plays a key role in the energy metabolism of the intestinal parasite Giardia duodenalis, an amitochondrial protozoan that infects humans and animals and causes significant morbidity. Despite that an arginine deiminase (ADI) has been implicated in virulence, it remains unknown if ADI allele variants from the different genetic G. duodenalis subgroups (assemblages) differ in function. Here, the hypothesis was tested that sequence variation detected between G. duodenalis ADI alleles from the two G. duodenalis assemblage types found in humans affects functional parameters of the enzyme with potential consequences in life cycle progression. The ADI enzyme’s affinity for arginine was ~ 5fold reduced in sub-assemblage AII isolates, a human specific assemblage, in comparison to zoonotic sub-assemblage AI and B isolates. We identified the two amino acid residues responsible for the lower substrate affinity of ADIAII variant. By combining genetic ADI-knockout mutants, biochemical assays of substrate affinity, and cellular analyses of life-cycle progression, we demonstrate that ADI is required for efficient parasite encystation and that the lower substrate affinity in ADIAII correlates with reduced encystation efficiency. We further demonstrate that arginine is required for efficient encystation, and use an ADI knockout strain to confirm that ADI mediates this arginine dependence. Thus, we suggest that ADI is a quantitative trait that affects life cycle progression of G. duodenalis with putative clinical and epidemiological relevance.