The epidemiology of canine American cutaneous leishmaniasis (ACL) due to Leishmania (Viannia) spp. was investigated in Huánuco, Peru to 1) describe the natural course of canine L. (Viannia) infections and 2) assess the role of domestic dogs as ACL reservoir hosts. Over a three-year period 1,022 dogs were surveyed, with cumulative village L. (Viannia) prevalence being 26% (range = 0-100%). The incidence of L. (Viannia) was estimated to be 0.285 dogs/year (95% confidence interval [CI] = 0.160-0.410) using cross-sectional data and 0.291 dogs/year (95% CI = 0.195-0.387) using data from 108 dogs that were surveyed prospectively. The recovery rate was estimated to be 0.456 dogs/year (95% CI = 0.050-0.862) and 0.520 dogs/year (95% CI = 0.302-0.738), respectively. Using those findings, the basic reproduction number was estimated to be R0 approximately to 1.9; if dogs were the principal ACL reservoirs, the mean yearly effort (i.e., coverage or elimination) of a dog control intervention (e.g., collaring, culling, or vaccination) to ensure the elimination of L. (Viannia) spp. transmission would be as low as 47%.