Halcinonide is a topical corticosteroid approved by the US Food and Drug Administration (FDA), known for its anti‐inflammatory and antipruritic properties. The therapeutic benefits of halcinonide have rendered it an effective treatment regimen for various dermatological conditions such as psoriasis, dermatitis, and eczema. However, stability of the drug substance is a prerequisite in determining the therapeutic efficacy and plays a crucial role during formulation development and long‐term storage. As corticosteroids are highly susceptible to degradation, the current study aims to expose halcinonide to different stress conditions and understand its stability behavior. An HPLC method was developed for the separation of halcinonide and its degradation products. Separation was accomplished in gradient mode using an Eclipse Plus C18 column (250 × 4.5 mm, 5 μm) with ammonium formate (10 mM, pH 6.5) and acetonitrile as the mobile phases. LC–Q‐TOF/MS/MS studies were conducted on halcinonide, which led to the identification of degraded products using optimized mass parameters. A potential mechanistic degradation pathway for halcinonide, along with the major identified degradation products has been established. The chromatographic method that was developed has been validated in compliance with the Q2(R1) guideline of the International Council for Harmonization. ProTox‐II was used to perform in silico toxicity studies in order to evaluate the toxicity potential of both halcinonide and the identified degradation products.