Terbinafine is an allylamine compound and is a synthetic antifungal medication. The structure of the molecule is lipophilic in nature and tends to accumulate in skin, nails, and fatty tissues.

Nail fungus infections live deep under the nail in the nail bed. Surface treatments may not be able to reach it in sufficient amounts, so terbinafine hydrochloride is given orally in tablet form, which is absorbed through the bloodstream to reach the infection; this method can cause hepatotoxicity, or liver damage, as well as other serious side effects, so those taking Lamisil tablets often have blood screenings every month.

Terbinafine acts by interfering with the ability of fungi to make chemicals called sterols that are an important part of the membrane that surrounds fungal cells and holds them together. This weakens the cell membrane. As with the other allylamines, terbinafine inhibits ergosterol biosynthesis via inhibition of squalene epoxidase. This enzyme is part of the fungal sterol synthesis pathway that creates the sterols needed for the fungal cell membrane

Formal Chemical Name (IUPAC)
(E)-N,6,6-trimethyl-N-(naphthalen-1-ylmethyl)hept-2-en-4-yn-1-amine

References

http://en.wikipedia.org/wiki/Terbinafine