Leishmania spp. suppress macrophage activity as part of their interaction with the immune system. Interferon-gamma (IFNgamma), a cytokine that participates in the activation of macrophages and the killing of intercellular parasites, induces healing of leishmaniasis. We investigated a sequence of local and systemic inflammatory cell parameters after IFNgamma therapy in a patient with chronic, localized, cutaneous leishmaniasis caused by Leishmania donovani. Histology, immunohistochemistry, polymerase chain reaction (PCR) for L. donovani, and analysis of T-cell receptor gene fragments from skin lesions as well as peripheral blood phenotyping were performed before, during, and after IFNgamma therapy. During therapy, epithelioid cell granulomas developed with a high number of lesional human leukocyte antigen (HLA) DR+ macrophages, and HLA-DR expression on monocytes increased to high counts, indicating macrophage activation. Simultaneously, T-cell receptor-beta gene-specific PCR showed a peak at 243 base pairs, indicating clonal expansion of Leishmania-reactive T lymphocytes. After therapy, PCR detected minimal residual leishmanial DNA in healing lesions, suggesting the destruction of the parasites. In conclusion, IFNgamma therapy compensates for the parasite-dependent major histocompatibility complex class II downregulation and induces healing of chronic cutaneous leishmaniasis.