Classical activation of macrophages infected with Leishmania species results in expression and activation of inducible NO synthase (iNOS) leading to intracellular parasite killing. Macrophages can contrastingly undergo alternative activation with increased arginase activity, metabolism of arginine along the polyamine pathway, and consequent parasite survival. An active role for parasite-encoded arginase in host microbicidal responses has not previously been documented. To test the hypothesis that parasite-encoded arginase can influence macrophage responses to intracellular Leishmania, a comparative genetic approach featuring arginase-deficient mutants of L. mexicana lacking both alleles of the gene encoding arginase (Deltaarg), as well as wild-type and complemented Deltaarg controls (Deltaarg[pArg]), was implemented. The studies showed: 1) the absence of parasite arginase resulted in a significantly attenuated infection of mice (p<0.05); 2) poorer survival of Deltaarg in mouse macrophages than controls correlated with greater NO generation; 3) the difference between Deltaarg or control intracellular survival was abrogated in iNOS-deficient macrophages, suggesting iNOS activity was responsible for increased Deltaarg killing; 4) consistently, immunohistochemistry showed enhanced nitrotyrosine modifications in tissues of mice infected with Deltaarg compared with control parasites. Furthermore, 5) in the face of decreased parasite survival, lymph node cells draining cutaneous lesions of Deltaarg parasites produced more IFN-gamma and less IL-4 and IL-10 than controls. These data intimate that parasite-encoded arginase of Leishmania mexicana subverts macrophage microbicidal activity by diverting arginine away from iNOS.