Although most restaurants in Cusco [1] have vegetarian options, there are a few places dedicated exclusively to vegetarian cuisine. A popular option is Govinda (Espaderos 128, 8 a.m.–10 p.m. daily, US$3–5), half a block from the Plaza de Armas [2]. This small Indian-inspired restaurant has flavorsome dishes, but the US$8.50 midday menu is overpriced.
For some inexpensive vegetarian and vegan fare head to Govinda Lila (Carmen Bajo 228-A, 9 a.m.–9 p.m. daily, US$2–3.50). This cute little place is great value for money. The US$2 lunch menu includes a great salad buffet, a soup, a main, and a simple dessert. The US$3 breakfast buffet has everything you could possibly want except for eggs. The muesli and yogurt are homemade by the friendly owner, Lojita. For a sweet finish make sure you try the Govinda pie.
A worthwhile and economic option is El Encuentro (Santa Catalina Ancha 384, tel. 084/24-7977, 9 a.m.–3 p.m. and 6–9 p.m. Mon.–Sat., US$3.50–5). It has a clean, simple midday menu for US$2, which also has a salad bar, with interesting options such as a vegetarian ají de gallina.
Links:
[1] http://www.moon.com/destinations/peru/cusco
[2] http://www.moon.com/destinations/peru/cusco/sights/plaza-de-armas