Background: Cutaneous leishmaniasis is a vector-borne disease that is in Ethiopia mainly caused by the parasite Leishmania aethiopica. This neglected tropical disease is common in rural areas and causes serious morbidity. Persistent nonhealing cutaneous leishmaniasis has been associated with poor T cell mediated responses; however, the underlying mechanisms are not well understood. Methodology/Principal Findings: We have recently shown in an experimental model of cutaneous leishmaniasis that arginase-induced L-arginine metabolism suppresses antigen-specific T cell responses at the site of pathology, but not in the periphery. To test whether these results translate to human disease, we recruited patients presenting with localized lesions of cutaneous leishmaniasis and assessed the levels of arginase activity in cells isolated from peripheral blood and from skin biopsies. Arginase activity was similar in peripheral blood mononuclear cells (PBMCs) from patients and healthy controls. In sharp contrast, arginase activity was significantly increased in lesion biopsies of patients with localized cutaneous leishmaniasis as compared with controls. Furthermore, we found that the expression levels of CD3ζ, CD4 and CD8 molecules were considerably lower at the site of pathology as compared to those observed in paired PBMCs. Conclusion: Our results suggest that increased arginase in lesions of patients with cutaneous leishmaniasis might play a role in the pathogenesis of the disease by impairing T cell effector functions. Author Summary: The leishmaniases are a complex of diseases caused by Leishmania parasites. Currently, the diseases affect an estimated 12 million people in 88 countries, and approximately 350 million more people are at risk. The leishmaniases belong to the most neglected tropical diseases, affecting the poorest populations, for whom access to diagnosis and effective treatment are often not available. Leishmania parasites infect cells of the immune system called macrophages, which have the capacity to eliminate the intracellular parasites when they receive the appropriate signals from other cells of the immune system. In nonhealing persistent leishmaniasis, lymphocytes are unable to transmit the signals to macrophages required to kill the intracellular parasites. The local upregulation of the enzyme arginase has been shown to impair lymphocyte effector functions at the site of pathology. In this study, we tested the activity of this enzyme in skin lesions of patients presenting with localized cutaneous leishmaniasis. Our results show that arginase is highly upregulated in these lesions. This increase in arginase activity coincides with lower expression of a signalling molecule in lymphocytes, which is essential for efficient activation of these cells. These results suggest that increased arginase expression in the localized cutaneous lesions might contribute to persistent disease in patients presenting with cutaneous leishmaniasis. [ABSTRACT FROM AUTHOR]