The polyene antibiotic amphotericin B is currently a second-line treatment for visceral leishmaniasis (VL) and mucocutaneous leishmaniasis. Lipid-amphotericin B formulations with lower toxicity than the parent drug that were developed for the treatment of systemic mycoses have proved to be an effective treatment for VL, especially AmBisome, a small unilamellar negatively charged liposome. In vitro, free amphotericin B was three to six times more active than the liposomal formulation AmBisome against both Leishmania major promastigotes in culture and amastigotes in murine macrophages. In a BALB/c L. major model of cutaneous infection, liposomal amphotericin B administered once a day on six alternate days by the intravenous route produced a dose-response effect between 6.25 and 50 mg/kg. Liposomal amphotericin B administered subcutaneously close to a lesion had no significant activity. Free drug was ineffective at nontoxic doses. The results suggest that liposomal amphotericin B may be useful in the treatment of cutaneous leishmaniasis.