SummaryMorphological modifications of growth forms of dermatophyte fungi, arthroconidia and germ tubes exposed to terbinafine incorporated in the stratum corneum were studied by scanning and transmission electron microscopy. Changes observed in arthroconidial morphology included pores and erosions present in the cell wall, with layers peeling off. The cell membrane was destroyed. Dilated vacuoles and small electron‐dense areas were evident in the arthroconidial cytosol. Although germination was partially arrested, inhibition of hyphal extension was seen on all body sites examined. Germ tubes were susceptible to terbinafine. with pores appearing along their length and collapsed hyphae seen following exposure to the drug. This study suggests that the outer and inner layers of the arthroconidial cell wall are the initial targets of terbinafine action, followed by alterations to the cytosol and intracellular organelle