Transcriptional profiling is a powerful tool to investigate and detect human diseases. In this study, we used bulk RNA-sequencing (RNA-Seq) to compare the transcriptomes in skin lesions of leprosy patients or controls affected by other dermal conditions such as granuloma annulare, a confounder for paucibacillary leprosy. We identified five genes capable of accurately distinguishing multibacillary and paucibacillary leprosy from other skin conditions. Indoleamine 2,3-dioxygenase 1 (IDO1) expression alone was highly discriminatory, followed by TLR10, BLK, CD38, and SLAMF7, whereas the HS3ST2 and CD40LG mRNA separated multi- and paucibacillary leprosy. Finally, from the main differentially expressed genes (DEG) and enriched pathways, we conclude that paucibacillary disease is characterized by epithelioid transformation and granuloma formation, with an exacerbated cellular immune response, while multibacillary leprosy features epithelial-mesenchymal transition with phagocytic and lipid biogenesis patterns in the skin. These findings will help catalyze the development of better diagnostic tools and potential host-based therapeutic interventions. Finally, our data may help elucidate host-pathogen interplay driving disease clinical manifestations.