Cutaneous leishmaniasis (CL) is one of the endemic and neglected diseases known to exist in Ethiopian highlands. Although CL is an increasing challenge in the highlands of Saesie Tsaedaemba Wereda, there was little information on its prevalence. This study was conducted from November 2011 to April 2012 to assess the epidemiological situation of CL in Saesie Tsaedaemba Wereda. A cross sectional design was employed in randomly selected Kebelles and house to house survey was carried out in the Wereda. Detailed clinical assessment, and smear and culture for Leishmania parasite detection were done to confirm clinical suspension. Polymerase chain reaction and restriction fragment length polymorphism (PCR-RFLP) analysis of the ribosomal DNA internal transcribed spacer (ITS-1) sequences was used to type isolates. Sandfly collection was conducted in possible micro-habitats. The overall prevalence of CL in the Wereda was 14.0% (6.7% for active lesion and 7.3% for scar) with highest prevalence among age group of 10-19 years. Field isolates typed were L. aethiopica.