Background: Phlebotomus orientalis Parrot (Diptera: Psychodidae) is the main vector of visceral leishmaniasis (VL) caused by Leishmania donovani in East Africa. Here we report on life cycle parameters and susceptibility to L. donovani of two P. orientalis colonies originating from different sites in Ethiopia: a non-endemic site in the lowlands - Melka Werer (MW), and an endemic focus of human VL in the highlands - Addis Zemen (AZ). Methodology/Principal Findings: Marked differences in life-cycle parameters between the two colonies included distinct requirements for larval food and humidity during pupation. However, analyses using Random Amplified Polymorphic DNA (RAPD) PCR and DNA sequencing of cytB and COI mitochondrial genes did not reveal any genetic differences. F1 hybrids developed successfully with higher fecundity than the parental colonies. Susceptibility of P. orientalis to L. donovani was studied by experimental infections. Even the lowest infective dose tested (2×103 per ml) was sufficient for successful establishment of L. donovani infections in about 50% of the P. orientalis females. Using higher infective doses, the infection rates were around 90% for both colonies. Leishmania development in P. orientalis was fast, the presence of metacyclic promastigotes in the thoracic midgut and the colonization of the stomodeal valve by haptomonads were recorded in most P. orientalis females by day five post-blood feeding. Conclusions: Both MW and AZ colonies of P. orientalis were highly susceptible to Ethiopian L. donovani strains. As the average volume of blood-meals taken by P. orientalis females are about 0.7 μl, the infective dose at the lowest concentration was one or two L. donovani promastigotes per sand fly blood-meal. The development of L. donovani was similar in both P. orientalis colonies; hence, the absence of visceral leishmaniasis in non-endemic area Melka Werer cannot be attributed to different susceptibility of local P. orientalis populations to L. donovani.