BACKGROUND: Leishmania donovani is the etiological agent of visceral leishmaniasis (VL) in the Indian subcontinent. However, it is also known to cause cutaneous leishmaniasis (CL) in Sri Lanka. Sri Lankan L. donovani differs from other L. donovani strains, both at the molecular and biochemical level. To investigate the different species or strain-specific differences of L. donovani in Sri Lanka we evaluated sequence variation of the kinetoplastid DNA (kDNA). METHODS: Parasites isolated from skin lesions of 34 CL patients and bone marrow aspirates from 4 VL patients were genotyped using the kDNA minicircle PCR analysis. A total of 301 minicircle sequences that included sequences from Sri Lanka, India, Nepal and six reference species of Leishmania were analyzed. RESULTS: Haplotype diversity of Sri Lankan isolates were high (H  = 0.757) with strong inter-geographical genetic differentiation (F  > 0.25). In this study, L. donovani isolates clustered according to their geographic origin, while Sri Lankan isolates formed a separate cluster and were clearly distinct from other Leishmania species. Within the Sri Lankan group, there were three distinct sub-clusters formed, from CL patients who responded to standard antimony therapy, CL patients who responded poorly to antimony therapy and from VL patients. There was no specific clustering of sequences based on geographical origin within Sri Lanka. CONCLUSION: This study reveals high levels of haplotype diversity of L. donovani in Sri Lanka with a distinct genetic association with clinically relevant phenotypic characteristics. The use of genetic tools to identify clinically relevant features of Leishmania parasites has important therapeutic implications for leishmaniasis.