Topical treatment of fungal infections of skin is often limited by the poor percutaneous permeation through human skin. For this reason, the development of topical formulations which are able to improve the percutaneous permeation of antifungal agents is of particular importance for skin conditions. A useful strategy for improving the percutaneous flux is to improve the concentration of drug and to choose the appropriate vehicle for the drug delivery across the skin. Various studies have proved that microemulsion can significantly increase topical and transdermal availability of poorly water soluble drug candidates. Terbinafine is a topically and orally active synthetic allylamine broad spectrum antifungal agent. Shorter courses of terbinafine are needed for the treatment of various fungal and yeast skin infections. Higher effectiveness of terbinafine has the advantage for using it in topical microemulsion. So present study is designed to develop the topical microemulsion of terbinafine hydrochloride.