Nepal is endemic for visceral leishmaniasis; however, recently a solitary report of cutaneous leishmaniasis (CL) was recorded. The present report describes a CL case in a Nepalese woman, initially referred as a case of basal cell carcinoma. Histopathological examination, culture and PCR analysis of lesions revealed it to be a case of CL. Molecular methods, including kDNA PCR, ITS-1 PCR-RFLP and sequence analysis, revealed the species as Leishmania major. The patient was cured with sodium stibogluconate. This report suggests that the extent to which L. major causes CL in the Indian subcontinent needs to be monitored.