Exfoliative cytology smears from the lesions of 179 patients with cutaneous leishmaniasis due to Leishmania tropica were studied with specific reference to cellular reactions and their effect on the parasite. Aggregates of the parasite (so-called Leishmania Donovan bodies) were present within macrophages and in some fibroblasts. The nature of the inflammatory reaction to the disease was studied by performing differential counts of the inflammatory cells present in the smears. These were correlated with the number of Leishman Donovan bodies. There was an inverse relationship between the number of Leishman Donovan bodies and the percentage of small lymphocytes, neutrophils, and type I macrophages. It is postulated that aggregates of activated macrophages (designated types II and III) and the Leishmanian milieu (sticky matrix) protect the amastigote Leishmania parasites from being eradicated by the inflammatory and immune reaction. The cytoplasmic blebbing of the parasitophorous vacuoles and cell to cell connection of the activated histiocytes could be shown by the CD-68 immunostaining of the tissue biopsy.