BACKGROUND: Cutaneous leishmaniasis (CL) is endemic in developing countries. Several types of treatments have been suggested, but none of them is completely effective and without side-effects. CO(2) laser has a specific thermolysis effect on infected tissues in CL. OBJECTIVES: To determine the efficacy and safety of CO(2) laser vs. combined cryotherapy and intralesional meglumine antimoniate (glucantime) in dry-type CL. METHODS: This is a prospective, randomized open trial study (Kerman, Iran) from November 2007 to August 2009. A total of 96 patients were randomly assigned to receive one session of CO(2) laser therapy and 95 patients on combined cryotherapy biweekly with intralesional meglumine antimoniate weekly until complete cure or up to 12 weeks, whichever is earlier. Clinical and laboratory cure, defined as complete re-epithelialization of 100%, complete flattening of induration and negative smear of lesions compared with baseline at weeks 2, 6, 12 and 16, and also at the time of complete cure (week 2, 6, 12 or 16). RESULTS: Of 191 participants, 80 patients with 95 lesions in group A and 80 patients with 95 lesions in group B completed the study. Complete cure was 93.7% (89/95 lesions) in group A and 78% (74/95 lesions) in group B. Complications were similar in the two groups and were limited to the ulcer sites. CONCLUSIONS: The CO(2) laser was more effective in treating dry-type cutaneous leishmaniasis than combined cryotherapy and intralesional glucantime and resulted in a shorter healing time (6 weeks vs. 12 weeks) with a single treatment session.