Leishmania donovani, a unicellular protozoan parasite, causes a wide range of human diseases including fatal visceral leishmaniasis. Tyrosyl DNA‐phosphodiesterase 1 (TDP1) hydrolyzes the phosphodiester bond between DNA 3′‐end and a tyrosyl moiety of trapped topoisomerase I‐DNA covalent complexes (Top1cc). We have previously shown Leishmania harbors a TDP1 gene (LdTDP1), however, the biological role of TDP1 remains largely unknown. In the present study, we have generated TDP1 knockout L. donovani (LdTDP1−/−) promastigotes and have shown that LdTDP1−/− parasites are deficient in 3′‐phosphodiesterase activities and were hypersensitive to Top1‐poison like camptothecin (CPT), DNA alkylation agent like methyl methanesulfonate, and oxidative DNA lesions generated by hydrogen peroxide but were not sensitive to etoposide. We also detected elevated levels of CPT‐induced reactive oxygen species triggering cell cycle arrest and cell death in LdTDP1−/− promastigotes. LdTDP1−/− promastigotes accumulate a significant change in the membrane morphology with the accumulation of membrane pores, which is associated with oxidative stress and lipid peroxidation. To our surprise, we detected that LdTDP1−/− parasites were hypersensitive to antileishmanial drugs like amphotericin B and miltefosine, which could be rescued by complementation of wild‐type TDP1 gene in the LdTDP1−/− parasites. Notably, multidrug‐resistant L. donovani clinical isolates showed a marked reduction in TDP1 expression and were sensitive to Top1 poisons. Taken together, our study provides a new role of LdTDP1 in protecting L. donovani parasites from oxidative stress‐induced DNA damage and resistance to amphotericin B and miltefosine.