The life cycle of Leishmania panamensis in Phlebotomus papatasi was studied to characterize barriers limiting parasite colonization, differentiation, migration, and attachment in an unnatural sand fly host. The insects were fed a suspension of L. panamensis-infected macrophages and human erythrocytes, and were examined up to 16 days post-infection by light and electron microscopy. Histologic examination of 401 flies showed the peritrophic membrane to be the first important barrier to parasite establishment in the gut lumen. In most flies, parasites were unable to escape from the closed peritrophic sac, which was either excreted or retained intact in the midgut. After five days, only 31% of the flies were infected; attached parasites colonized the pylorus-ileum and/or colon regions of the hindgut. Anterior migration into the cardia region of the midgut occurred in < 1% of infected flies; no parasites colonized the foregut. In the bloodmeal and residual bloodmeal, five morphologic forms developed from ingested amastigotes: stumpy, spatulate, elongate, short nectomonad promastigotes, and paramastigotes. Abnormal retention of amastigotes in macrophages and delayed development of promastigote stages was observed. The primary form attached in the hindgut was a pear-shaped haptomonad promastigote. Differentiation of L. panamensis in Ph. papatasi appeared to be similar to that described in natural hosts, except that metacyclic infective forms were not observed, and some forms developed in unusual locations. Phlebotomus papatasi was a partly refractory biological host for L. panamensis. The peritrophic membrane adversely affected the infection rate; rare anterior migration and a lack of metacyclic promastigotes may preclude transmission by bite.