BACKGROUND Current treatment of onychomycosis of the toenail is poor and relapse is common. OBJECTIVE Our purpose was to assess the efficacy and safety of oral terbinafine and placebo in onychomycosis of the toenail with the use of a novel treatment protocol. METHODS This was a randomized, double-blind, 48-week study. Twelve weeks of terbinafine (250 mg daily) or placebo was followed by 12 weeks of observation. Responders received no further treatment and nonresponders were offered 12 weeks of terbinafine (250 mg daily) from week 28. RESULTS Of 111 evaluable patients, 88% (49 of 56) of the patients given terbinafine and 29% (16 of 55) of the patients given placebo had a negative mycologic culture at week 24 (p < 0.001), 57% (32 of 56) of the terbinafine group and 6% (3 of 55) of the placebo group were responders (p < 0.001). By week 48, after the terbinafine nonresponders were given a second 12-week course of terbinafine, the overall mycologic cure rate for the patients given terbinafine was 94%. CONCLUSIONS High mycologic cure rates in onychomycosis of the toenail can be achieved by terbinafine by this novel treatment regimen.