Posing a threat to the ongoing leishmaniasis elimination efforts in the Indian subcontinent, L. donovani-induced cutaneous leishmaniasis (CL) has been recently reported in many countries. Sri Lanka reports a large focus of human cutaneous leishmaniasis (CL) caused by Leishmania donovani, a usually visceralizing parasite. Enhanced case detection, early treatment, and in-depth understanding of sequalae are required to contain the spread of disease. Visceralizing potential of dermotropic strains has not been fully ruled out. Sri Lankan strains have shown a poor response to established serological assays. The present concern was to develop an in-house serological assay and to determine the seroprevalence of CL for identifying visceralizing potential and its usefulness in enhancing case detection. Crude cell lysate of dermotropic L. donovani promastigotes-based indirect enzyme-linked immunosorbent assay (ELISA) was previously optimized. Assay was evaluated using sera from 200 CL patients, 50 endemic and 50 nonendemic healthy controls, 50 patients with other skin diseases, and 50 patients with other systemic diseases. Seroprevalence and clinicoepidemiological associations were analyzed. Assay was compared with light microscopy (LM) and in vitro culturing (IVC). Cost comparison was carried out. Seroprevalence of CL was 82.0%. The assay had 99.5% specificity, and all healthy controls were negative at 0.189 cut-off. Positive and negative predictive values were 99.4% and 84.7%, respectively. Positivity obtained in ELISA was comparable to LM and higher than that of IVC. Cost per patient was 3.0 USD for both ELISA and LM and 6.0 USD for IVC. Infections occurring in all age groups and both genders demonstrated >75.0% of seropositivity. Patients had lesions with different durations/types/sizes showed >70.0% of seropositivity. Study identified a high seroprevalence of L. donovani-induced CL for the first time, indicating potential for visceralization or transient serological response. This can be used as a second line test in LM-negative CL cases to enhance clinical case detection. Further studies are warranted to examine in-depth correlations, antigen profiles, comparison with other established serological tools, and usefulness in the detection of asymptomatic cases. (National patent LK/P/1/19697).