ABSTRACTBackgroundTerbinafine is widely used to treat onychomycosis caused by dermatophyte fungi. Terbinafine resistance in recent years is causing concern. Resistance has so far been associated with single‐nucleotide substitutions in the DNA sequence of the enzyme squalene epoxidase (SQLE) but how this affects SQLE functionality is not understood.ObjectivesThe aim of this study was to understand newly discovered resistance in two Australian strains of Trichophyton interdigitale.Patients/MethodsResistance to terbinafine was tested in four newly isolated strains. Three‐dimensional SQLE models were prepared to investigate how the structure of their SQLE affected the binding of terbinafine.ResultsThis study found the first Australian occurrences of terbinafine resistance in two T. interdigitale strains. Both strains had novel deletion mutations in erg1 and frameshifts during translation. Three‐dimensional models had smaller SQLE proteins and open reading frames as well as fewer C‐terminal α‐helices than susceptible strains. In susceptible strains, the lipophilic tail of terbinafine was predicted to dock stably into a hydrophobic pocket in SQLE lined by over 20 hydrophobic amino acids. In resistant strains, molecular dynamics simulations showed that terbinafine docking was unstable and so terbinafine did not block squalene metabolism and ultimately ergosterol production. The resistant reference strain ATCC MYA‐4438 T. rubrum showed a single erg1 mutation that resulted in frameshift during translation, leading to C‐terminal helix deletion.ConclusionsModelling their effects on their SQLE proteins will aid in the design of potential new treatments for these novel resistant strains, which pose clinical problems in treating dermatophyte infections with terbinafine.