Leishmania is unable to synthesize heme and must acquire it from exogenous source, the mechanism of which is not known. We have shown that Leishmania endocytoses hemoglobin (Hb) and subsequently degrade it probably to generate heme. To understand how internalized Hb is degraded, we have cloned and expressed Rab7 homolog from Leishmania donovani. Interestingly, Rab7 in Leishmania is found to be localized both on early and late endocytic compartment and regulates both uptake and degradation of endocytosed Hb demonstrating that Rab7 in Leishmania play a very unique role connecting both early and late events of Hb endocytosis. Our data also indicate that overexpression of Rab7:WT in Leishmania induces transport of Hb to lysosomes and rapidly degrade internalized Hb. Whereas Hb transport to lysosomes and its degradation is significantly inhibited in cells overexpressing Rab7:T21N, a GDP locked mutant of Rab7. Moreover, cells overexpressing Rab7:T21N grow at a slower rate (<50%) compared with control Leishmania. Addition of exogenous hemin recovers the growth of Rab7:T21N mutant cells almost to the control level, suggesting that intracellular heme generated by Rab7-mediated Hb degradation is required for optimal growth of the parasites. Thus, our results identify a potential target which might be exploited to suppress the growth of Leishmania.