Jeremy Corbyn would decriminalise cannabis for medicinal purposes, but would not support legalising recreational drugs.
He said the huge consumption of drugs in Europe and America has fuelled a "deeply nasty" narcotics trade elsewhere in the world.
Speaking at a Labour leadership debate in Glasgow, he said: "I would decriminalise medicinal uses of cannabis.
"I would also want to look at supporting people who want to get out of the drugs trade in other parts of the world because there is the horrors of the drugs war that's going on in Central America, and very large numbers of people who have died as a result of it."
He said there "has to be an intelligent approach to this."
The Labour leader went on to say he did not take any drugs, and he wanted people to be "educated away from it".
Leadership challenger Owen Smith did not back any form of legalisation for recreational drugs.
Speaking at the same event, he said: "I think that I've seen in my constituency too many people who've been hard hit by the use of recreational drugs."
He added: "I know the argument that's made all over the world about taxing and licensing and not driving the drugs trade underground, and I've thought very hard about those things.
"But I think for my children and for future generations I don't think it's the right step."