Old World cutaneous leishmaniasis (OWCL) is an endemic and major health problem in Iran. The optimal treatment of OWCL is unknown, and current treatments are not ideally effective and have many adverse effects. To compare the efficacy and tolerability of combined oral azithromycin and allopurinol with intramuscular Glucantime in the treatment of OWCL, we conducted a prospective randomized clinical trial. A total of 86 patients with OWCL were assigned and divided randomly into two groups; they received a combination of azithromycin capsule 10 mg/kg/d and allopurinol tablet 10 mg/kg/d for two months or IM injection of Glucantime 20 mg/kg of antimony daily for 20 days. All patients were followed for two months after termination of treatment. Although immediately at the end of the treatment period, complete response was seen in 27.8% of patients on combination therapy vs. 0% in the Glucantime group. The combination of azithromycin and allopurinol had a better outcome; two months after the end of the treatment period, complete, partial, and no responses were seen in 38.9%, 22.2%, and 38.9% in combination therapy and 40%, 31.4%, and 28.6% in the Glucantime group. There was no significant difference between the response rate in both groups after two months (P = 0.5). No severe adverse effect occurred. This study demonstrated that the efficacy of combined oral azithromycin and allopurinol at the above doses and duration was similar to that of IM Glucantime in the treatment of OWCL.