The allylamine antimycotic terbinafine acts by inhibition of ergosterol biosynthesis at the level of squalene epoxidase. Using this mechanism in Candida parapsilosis cells, a functional assay was developed to investigate the effects of serum and serum proteins on the antifungal action of terbinafine and related drugs in vitro. Inhibition of ergosterol biosynthesis by terbinafine was antagonized by human serum in a dose-dependent non-saturable manner. The results were not affected by varying the period of pre-incubation of serum with the drug or with the fungal cells, or by performing the test in other species of Candida, Aspergillus and Trichophyton. Qualitatively similar effects were observed with the related allylamine compounds naftifine and SDZ 87-469, the extent of antagonism correlating with their lipophilicity. The effect appeared to be caused by non-specific binding of the drug to major serum components, including albumin and the lipoproteins (both LDL and HDL). Reduced bioavailability resulting from binding by serum may at least partly account for the low efficacy of terbinafine in experimental models of systemic infection, in contrast to its high efficacy in infections of the skin, nails and hair.