Tolnaftate, a thionoester anti-fungal drug, was subjected to alkaline hydrolysis to produce methyl(m-tolyl)carbamic acid and β-naphthol (tolnaftate impurity A). N-Methyl-m-toluidine, tolnaftate impurity D, was synthesized and structurally elucidated along with tolnaftate alkaline degradation products using IR, H1 NMR and MS. Two stability-indicating HPTLC and RP-HPLC methods were developed and validated, for the first time, for determination of tolnaftate, its alkaline degradation products and toxic impurities in the presence of methyl paraben, as a preservative in Tinea Cure® cream. The proposed HPTLC method depended on separation of the studied components on TLC silica gel F254 plates using hexane-glacial acetic acid (8:2, v/v) as a developing system and scanning wavelength of 230 nm. The proposed RP-HPLC method was based on separation of the five components on an Eclipse plus C18 column. The mobile phase used was acetonitrile-water containing 1% ammonium formate (40:60, v/v), with a flow rate of 1 mL/min and detection wavelength of 230 nm. The proposed methods allowed the assay of tolnaftate toxic impurities, β-naphthol and N-methyl-m-toluidine, down to 2%, allowing tracing of β-naphthol that could be absorbed by the skin causing systemic toxic effects, unlike tolnaftate, indicating the high significance of such determination. International Conference on Harmonization guidelines were followed for validation.