A prospective longitudinal survey of cutaneous leishmaniasis (Leishmania peruviana) was carried out in Peru on a study population of 4716 persons living in 38 villages (Departments of Lima, Ancash and Piura). Demographic and clinical data were collected from all individuals, and a Montenegro skin test (MST) was carried out on 72% (3418) of the study population. Each household was revisited at 3-monthly intervals for up to 2 years to detect new leishmaniasis cases; 497 people received a second MST at the end of the study. Analysis of the epidemiological data indicated that (i) 17% (16/94) of all infections were subclinical, (ii) this percentage increased significantly with age, (iii) clinical infections led to 73·9 % protective immunity (95 % C.I. 53·0–85·5 %) and relatively permanent MST responsiveness (recovery rate = 0·0098/year; 95% C.I. 0·000–0·020/year), (iv) sub-clinical infections led to protective immunity, which was positively correlated with their MST induration size (increasing by 17·9% per mm; P < 0·0001), and a mean MST recovery rate of 0·114/year (4/421 man-months), and (v) recurrent leishmaniasis was dominated by reactivations, not by reinfections.