Failure of first line therapies for cutaneous leishmaniasis is a public health issue. Since pathogenesis of dermal leishmaniasis is mediated by the immune and inflammatory responses, resolution of disease and control of infection are intimately linked to the host response. Several investigations have substantiated "proof of principal" for the therapeutic gain of co-adjuvant immunotherapy. This study will evaluate the efficacy and safety of using pentoxifylline (PTX) as a co-adjuvant in the treatment of cutaneous leishmaniasis with meglumine antimoniate in a randomized, double-blind, controlled trial. One arm will receive meglumine antimoniate and PTX and the other arm will receive meglumine antimoniate plus placebo. Efficacy will be assessed at the end of the treatment, and 5, 7, 13 and 26 weeks after initiation of treatment. Efficacy will be measured as the proportion of patients with definitive cure at 26 weeks after initiation of treatment, and time to healing. Safety will be assessed at the end of treatment with respect to the frequency and severity of adverse events.