Visceral leishmaniasis is endemic in the southern part of the Terai region of Nepal. Natural infections of Phlebotomus species with Leishmania parasites in these endemic areas were analyzed by a polymerase chain reaction (PCR) amplification-based assay. A total of 401 Phlebotomus argentipes and 202 P. papatasi female sandflies were captured in the Dhanusa district from 2004 to 2006 and analyzed. It was found that 6.7% of P. argentipes, but no P. papatasi, were positive for Leishmania parasites, suggesting that P. argentipes is a major vector in these areas. The infectivity of P. argentipes with Leishmania was consistent with the infection rates reported from other areas of the world. This is the first report of naturally infected Leishmania parasites in sandflies collected from Nepal.