Clinical diagnosis has become a challenge amidst a surge of cutaneous leishmaniasis in Southern Sri Lanka. The routine diagnostic method, slit-skin smear (SSS), has variable sensitivity, leading to undiagnosed cases. Improved diagnostics are urgently needed. We assessed a new in-house ELISA method for its diagnostic capabilities against ITS-1 nested PCR (gold standard—Gs). A cohort of 190 clinical CL cases was examined by SSS microscopy, anti-rKRP42 IgG ELISA (serum- and urine-based), and rK39-Immunochromatographic strip test. Validation was done using non-endemic sera, and cutoffs were developed using the receiver operating curve. The sensitivity of SSS for case detection was 77.9% (authors) and 76.3% (technicians). ELISA vs. Gs demonstrated sensitivity (Sn) = 94.4%; specificity (Sp) = 50.0%; positive predictive value (PPV) = 97.1%; negative predictive value (NPV) = 33.3%; Kappa agreement (Kp) = 0.39/p < 0.01. Comparison of the combination method (SSS by technicians and ELISA) vs. Gs showed: Sn = 98.9%; Sp = 30.0; PPV = 96.2; NPV 60.0%; Kp = 0.378/p < 0.01. All methods performed better compared to SSS (29.4%) where the clinical diagnosis was doubtful (PCR = 94.15%; serum ELISA = 88.2%; combination = 94.1%; p < 0.01 for all). High serum anti-rKRP42 titers were seen in those with multiple lesions. Anti-rKRP42 urine ELISA was suboptimal as a diagnostic test. A 9% rate of positivity was seen for rk39-ICT, and positives recorded high anti-rKRP42 titers. The diagnostic accuracy can be increased above the level of the Gs by combining SSS and ELISA. Advanced studies are required to understand the association between rk39-ICT positivity and high anti-rKRP42 titers.