Present study is carried out to compare laboratory diagnostic methods of Cutaneous leishmaniasis (CL) for the outdoor patients of Bolan Medical College Complex Hospital, Quetta, Balochistan. From November 2005 to December 2007, three hundred cases of CL patients were selected without restriction of age and sex. The lesions were divided into two groups. Early with duration less than 2 months and late duration between 2 to 4 months and were noted as nodules, plaques, ulcers and scarring (in case of relapses). Skin smears were taken on first visit of the patients, followed by skin biopsy for histopathological examination. Result showed that out of 300 cases 163 (54.33%) were positive smears for Leishmania donovani (LD) bodies and 137 (45.67%) were negative smears for LD bodies.. While histological examination of all 300 cases showed that only 83 (27.66%) cases were negative for (LD) bodies and no granuloma seen, except with evidence of acute and chronic inflammation. Further analysis of histological observations of positive cases (72.34%) revealed that 91(30.33%) cases had LD bodies,, 78 (26%) cases had only necrotic sloughs showing polymorph neutrophilic infiltration, and 48(16%) cases were having granulomas composed of, epithelioid cells Langhan's type of giant cells and lymphocytes. It is therefore concluded that histopathological examination as compared to skin smears method is more sensitive method for diagnosis of CL.