Objective: The main purpose of this study is to develop a film-forming solution with optimum physical-mechanical characteristics and excellent antifungal activity to enhance deposition and penetration into the stratum corneum (SC). Methods: The film-forming solutions of terbinafine HCl were formulated using methacrylate copolymers, polyethylene glycol 400, and ethanol as diluent. The selected formulations were subjected to test of physical-mechanical properties, drug release, drug permeation across the stratum corneum and drug deposition study. The best formulation was further evaluated for in vivo antifungal efficacy. Results: The selected formulations exhibited superior pharmaceutical characteristics, including rapid drying, non-stickiness, and being transparency on the skin. Formulation A (FA) had significantly lower tensile strength (4.78 N/m2, p<0.05) and higher percentage elongation at break (33.61%, p<0.05), which reduced the firmness of the film, allowing it to be super-flexible in following the movement of the skin and preventing loss of film through abrasion. FA showed significantly (p<0.05) rapid drug permeation (1510.51 µg/cm2) across the stratum corneum (SC) at 24 h when compared with the other formulations and the positive control proprietary drug (PD), Terbex® cream formulation (475.8 µg/cm2). Conclusion: Having superior physical-mechanical and drug permeation characteristics, FA can be considered as an efficient, reproducible, and efficacious antifungal formulation for topical application.