From July 1984 to September 1986, 105 cases of American cutaneous leishmaniasis were studied in a locality closely situated to an urbanized area of the city of Rio de Janeiro, Brazil. Settlement in this area was established at least 20 years ago but the first cases were noted six months prior to the beginning of this study. Cases were almost exclusively cutaneous and ulcerated, with one to six months of evolution. Montenegro's skin tests were positive in all cases and anti-Leishmania antibodies were detected by indirect immunofluorescence test in 74.3% of the patients. Parasites were demonstrated in 69.5% of cases. Domestic animals were easily found infected: 32% of the examined dogs and 30.8% of the examined equines were positive to the presence of Leishmania in cutaneous ulcerated lesions. Parasite isolates from human, dog and equines were immunologically characterized and identified as L. b. braziliensis. 73.0% of the sandfly population were Lutzomyia intermedia mainly caught on human baits and on domestic animals. Our observations suggest that this is an area of recent established L. b. braziliensis infection and that transmission probably occurs indoors or outdoors close to the houses.