Context: Pharmacotherapy is the standard first-line management of onychomycosis (OM). Prolonged treatment courses have reported cure rates of only 40%–80%. Although lasers have been approved by the US Food and Drug Administration for the clearance of nail in OM, their efficacy in the first-line management is not established. In this context, we conducted a study with the aim to ascertain efficacy of fractional CO2 laser along with topical 1% terbinafine cream in the management of OM. Settings and Design: This was a single-arm observational study in OM administered treatment over 16 weeks and analyzed at 6 months after the initiation of treatment. Subjects and Methods: Treatment naive and others after a 3 month washout period were administered fractional CO2 laser using pulse energy of 110 mJ, a density of 256 spots/cm2, pulse interval of 0.5 mm, pulse duration of 0.1 ms, and a rectangular spot size of 2–10 mm length and 0.6–5 mm breadth, every 4 weeks for four sessions along with 1% topical terbinafine cream. Outcome was assessed with Onychomycosis Severity Index (OSI), Visual Analog Score, mycological cultures and potassium hydroxide (KOH) mount at 16 weeks and 6 months after initiation of treatment. Statistical Analysis Used: Paired t-test was used to compare the change in OSI. Results: Mycological evaluation at the end of 16 weeks revealed that 90% (45 nails) were KOH negative and 88% (44 nails) were culture negative. Evaluation at 6 months revealed that 86% (43 nails) were KOH negative and 88% (44 nails) were culture negative. OSI improvement compared to baseline was good to complete in 42 cases, and Visual analog Score revealed 36 nails showing 3+–4+ improvement. Conclusions: Fractional CO2 laser is a viable alternative to oral antifungals, especially when they are contraindicated such as in military aviators and in cases where drug interactions are suspected.