Bella Vista City, Corrientes, Argentina, reported an epidemic outbreak of tegumentary leishmaniasis during 2003. The mean age of the 31 cases was 25.0 +/- 13.7 years old, with a sex ratio male:female 1.8, and without mucosal involvement. They clustered in two contiguous neighbourhoods, 96% in the periurban border and 4% in the peripheral outskirts. The transmission peak was estimated to have occurred during April 2003. Four species (3608 sand flies) were captured in nine sites: Lutzomyia neivai (90.1%), Lu. pessoai (8.9%), Lu. migonei (0.8 %), and Brumptomyia avellari (0.2 %). The outskirts/rural capture ratio of Lu. neivai was up to 3, and the outskirts/periurban up to 200. Therefore, the 'urban' transmission in this southernmost known focus is still an ecotone-border associated risk. The changes in human distribution or activities, patches of the secondary vegetation, periurban streams, rainfall of the previous year, and river period floods could all contribute to 'urban' outbreaks in the region. Tegumentary leishmaniasis risk should be assessed for any project that involves changes in land use throughout an endemic area.