Due to high toxicity and resistance of conventional anti-leishmanial drugs, an alternative therapeutic option for cutaneous leishmaniasis (CL) is required. This study aimed to formulate polymer-based chitosan nanoparticles as a drug (miltefosine) delivery system for treating leishmaniasis. Miltefosine-loaded chitosan nanoparticles (MLCNPs) were synthesized and then characterized by the use of UV-Visible spectroscopy, scanning electron microscopy (SEM), transmission electron microscopy (TEM), zeta potential, drug loading content (DLC), encapsulation efficacy (EE) and dynamic light scattering technique (DLS). Further, the in vitro anti-leishmanial activity of the characterized chitosan nanoparticles was assessed by Microculture Tetrazolium (MTT) assay, while in vivo efficacy was evaluated in infected BALB/c mice. The lesion healing rate was statistically analyzed using Wilcoxon signed-rank and Mann–Whitney tests. The MLCNPs were spherical shaped (97.5 nm), which presented efficient encapsulation (97.56%), drug loading content (91.5 µg/mL), and positive surface charge (+1.04 mV). MLCNPs were less hemolytic (6%) when compared to conventional miltefosine. MLCNPs (50 µg/ml) showed a potential antileishmanial effect (mean viability; 10±0.3%) on promastigotes in comparison to conventional miltefosine (mean viability; 18±1.3%). The IC50 value for MLCNPs and miltefosine was 0.0218 µg/mL and 0.3548 µg/mL, respectively. In vivo study proved that lesions of mice treated with oral and intralesional-injected MLCNPs were healed significantly (P = 0.01). Similarly, MLCNPs showed a significant antileishmanial effect and could be utilized as an alternative treatment for CL.