Latency is a conserved microbial strategy for establishing chronic infection, and the ability of Toxoplasma gondii to form long-lived cysts in neurons was thought to enable parasite persistence through immune evasion. To explore the role of latency in evasion and persistence, we first developed a system of ordinary differential equations (ODE) to model immune pressure and its impacts on parasite dynamics in the central nervous system (CNS). Our model recapitulated the natural dynamics of chronic T. gondii infection only with the incorporation of immune pressure on both tachyzoites and latent bradyzoite cysts. The role of anti-cyst immunity outlined in the model was further supported by in vivo experimental data. The use of transgenic parasites with cyst-restricted model antigen expression (bag1-OVA) demonstrated that cyst-derived antigens are recognized by OT-I CD8+ T cells. OT-I T cells responding to cyst-derived antigen exhibit distinct phenotypes and cytokine production when compared to T cells responding to antigen expressed by both tachyzoites and bradyzoites (tub1-OVA). Infection in mice lacking neuronal STAT1 (Stat1^ΔNEU) further demonstrated the presence of anti-cyst immunity, as Stat1^ΔNEU mice showed an increase in cyst number and size compared to WT mice. This suggests a noncytopathic mechanism of cyst control mediated by IFN-γ. However, the cellular source of IFN-γ to control neuronal cysts, responsiveness of cyst infected cells to IFN-γ, and regulation of IFN-γ production in the CNS remain active areas of investigation. To test the importance of latency in persistence, we used a mutant strain of T. gondii with a defect in cyst conversion (Δbfd1). Surprisingly, infection with Δbfd1 parasites revealed that the latent stage is not required for long term parasite persistence. Instead of parasite clearance, the absence of cyst formation resulted in increased parasite replication in the CNS, associated tissue necrosis, and decreased host survival. Together, our datasets reveal that the latent form of T. gondii is under immune pressure in the CNS but promotes persistence by mitigating infection-induced damage and preventing host mortality.