Fifty (50) cases of Leishmaniasis were included in a prospective study after making the diagnosis based on the demonstration of L D Bodies on bone marrow aspirate. Hemoglobin (Hb) and total leucocyte count (TLC) were less than 10 gm/dl and 4000 per/ml respectively in 22 out of 50 cases. Among 50 cases, 30 showed macrocytic red cell and hypersegmented neutrophils on peripheral blood smear as features of megaloblastic anemia. Out of 30 cases of leishmaniasis with megaloblastic anemia, 10 cases showed decreased reticulocyte count. Bone marrow aspiration cytology showed megaloblastic maturation in erythroid series and giant metamyelocytes in myeloid series in all 30 cases of leishmaniasis with megaloblastic changes. Bone marrow iron was also increased in these cases. However megakaryocyte was normal in all. Among 30 cases of leishmaniasis with megaloblastic changes, 15 cases were treated with sodium antimony gluconate (SAG) only and other 15 with SAG, folic acid and Vit. B12. Rest 20 cases of leishmaniasis without megaloblastic changes were also treated with SAG only. After treatment with SAG alone as well as with SAG, folic acid and vit. B12, hemoglobin and TLC improved in all 50 cases. Of 15 cases of leishmaniasis with megaloblastic changes, who were treated with SAG, folic acid and vit. B12, the reticulocyte count reached at peak on the 7th day and normalized at the end of 4th week. Red blood cells (RBC) also became normocytic normochromic and neutrophils became normal on peripheral blood smear. But no change was observed in reticulocyte count, RBC and white blood cell (WBC) morphology on peripheral blood smear in cases of leishmaniasis without megaloblastic changes and other 15 cases of leishmaniasis with megaloblastic changes, who received SAG only.