The composition of the essential oil of Thymus pulegioides and its antifungal activity on Candida, Aspergillus and dermatophyte fungal strains were studied. Essential oil from the aerial parts of the plant was obtained by hydrodistillation and analysed by GC and GC-MS. The oil showed high contents of carvacrol and thymol. The MIC and minimal lethal concentration were used to evaluate the antifungal activity against Candida (seven clinical isolates and four ATCC type strains), Aspergillus [five clinical isolates, and two Colección Española de Cultivos Tipo (CECT) and two ATCC type strains] and five clinical dermatophyte strains. Antifungal activity was evaluated for the essential oil and for its main components. To clarify its mechanism of action on yeasts and filamentous fungi, flow-cytometric studies of cytoplasmic membrane integrity were performed, and the effect on the amount of ergosterol was investigated. Results showed that T. pulegioides essential oil exhibited a significant activity against clinically relevant fungi, mainly due to lesion formation in the cytoplasmic membrane and a considerable reduction of the ergosterol content. The present study indicates that T. pulegioides essential oil has considerable antifungal activity, deserving further investigation for clinical applications.