Using the concept of a twisted trace density on a cyclic groupoid, a trace is constructed on a formal deformation quantization of a symplectic orbifold. An algebraic index theorem for orbifolds follows as a consequence of a local Riemann-Roch theorem for such densities. In the case of a reduced orbifold, this proves a conjecture by Fedosov, Schulze, and Tarkhanov. Finally, it is shown how the Kawasaki index theorem for elliptic operators on orbifolds follows from this algebraic index theorem.