This is an experimental study of the flattening and breakup of liquid drops in a single‐axis acoustic levitation field, and is an extension of the authors’ previous work [C. P. Leeetal., Phys. Fluids A3, 2497 (1991); Proceedings of the 30th Aerospace Sciences Meeting and Exibit, Reno, NV (1992)], on the static shape and stability of acoustically levitated drops. Two aspects, namely (i) the variation of drop equilibrium shape with sound pressure level and, (ii) the mechanism of disintegration of small drops in intense sound fields, have been studied mainly with water drops. The drop‐shape study reveals that the critical acoustic Bond numberBa,cr [Ba=A2Rs/(&sgr;&rgr;c2);A: acoustic amplitude;Rs: spherical radius of the drop; &sgr; : surface tension of the drop liquid; &rgr;: density of air and;c: sound speed in air], at which a downturn in acoustic intensity occurs for the larger drops, or loss of stability occurs for the smaller drops, varies from about 2.6 (forkRs∼0.74;k: acoustic wave number) to about 3.6 (forkRs∼0.25). The corresponding nondimensional critical equatorial radiusR*cr(R*=R/Rs,R: equatorial radius of the drop) varies between 1.5 and 1.4. The study also reveals that, for deformationR* greater than about 1.3, the drop assumes the shape of a disk. The study of the dynamics of disintegration of small drops reveals that, following loss of stability, the drop expands horizontally with the liquid close to the edge drawn into a sheet by acoustic suction. The sheet continuously thins during expansion and two types of waves, one in the azimuthal direction, and the other in the radial direction, are parametrically excited on it. The ensuing violent vibration shatters the drop; with the whole process having a time scale of the order of 0.5 msec. These results partially confirm the mechanism of drop disintegration postulated by Danilov and Mironov [J. Acoust. Soc. Am.92, 2747 (1992)]. The parametric instability of the thin sheet differs from that of the well established Faraday instability of a liquid half‐space, where the parametric oscillations are excited at half the frequency of the external field.