Background Cutaneous leishmaniasis is a neglected tropical disease caused by Leishmania spp. and transmitted by female sandflies. Terrorism and counter-insurgency military operations in Federally Administered Tribal Areas (FATA) lead to a large-scale migration of internally displaced persons (IDPs) in Khyber Pakhtunkhwa and thus, new outbreaks of several infectious diseases such as cutaneous leishmaniasis occurred. This study intended to find the prevalence of cutaneous leishmaniasis in people with cutaneous lesions suspected of having cutaneous leishmaniasis in four remote districts of Khyber Pakhtunkhwa and to assess the participant's knowledge, attitude, and practices about the infection and its control. Methods A cross-sectional study was carried out in four remote districts of Khyber Pakhtunkhwa including Karak, Lakki Marwat, Tank, and Dera Ismail Khan (D. I. Khan) and a total of 1,674 participants were recruited using a convenience sampling technique. Results The prevalence of cutaneous leishmaniasis among the participants with cutaneous lesions was 50.4% and the infection was comparatively more prevalent in district Karak. Among participants, 56.8% were male and mostly, 53.8% were under the age of 16 years with 52.8% living in kutcha houses and were from rural areas. Multiple skin lesions were more common, and the face was frequently affected body part. The ratio of participants with lesions older than a month was higher and the majority confronted infections with blood protozoan parasites for the first time. Most participants were unaware of the signs/symptoms of the disease, basic knowledge of the vectors, anthroponotic spread, preventive measures, secondary infections, and reservoir hosts. The use of wood/animal dung as fuel, closeness with reservoir animals, and no use of insect repellents were some of the notable risk factors. Conclusion Cutaneous leishmaniasis is highly prevalent in the study area and a very low level of awareness was reported among the participants. This study necessitates the planning and execution of regulations and preventive programs, public health education, awareness campaigns, and disease management practices to overcome future incidence of cutaneous leishmaniasis.