Arabian horses, the eldest equine breeds, have great economic and social significance for its long, unique, and storied history. Molecular characterization of dermatophyte species affecting Arabian horses is a crucial necessity for epidemiologic and therapeutic purposes. The objective of this study was to identify and differentiate isolates of dermatophytes isolated from naturally infected Arabian horses at species and strains levels using PCR-restriction fragment length polymorphism (RFLP) and DNA sequencing. Additionally, antifungal susceptibility testing using broth microdilution method was performed for the isolated dermatophyte species against six antifungal agents. Dermatophytes isolates (n = 20) representing four different species including Microsporum (M) canis, M. equinum, Trichophyton (T) mentagrophytes, and T. verrucosum were subjected for molecular characterization. The isolated dermatophytes were identified based on PCR of the ribosomal region spanning internal transcribed spacer (ITS1 and ITS2), the 5.8S rDNA and subsequent restriction analysis using MvaI and sequence analysis. Trichophyton mentagrophytes and T. verrucosum were differentiated by PCR-RFLP; meanwhile, the restriction profile of M. canis was identical to that of Arthroderma otae (telomorphic state) and M. equinum. Internal transcribed spacer sequencing technique affirmed the RFLP findings and differentiated the closely related taxon. Itraconazole is effective against M. canis and M. equinum, while terbinafine and griseofulvin are more effective against T. mentagrophytes and T. verrucosum. In conclusion, PCR-RFLP technique is a reliable tool for the identification of dermatophyte species from Arabian horses. Internal transcribed spacer sequencing provides a precise and useful technique for the identification and differentiation of closely related dermatophyte species. Terbinafine, griseofulvin, and itraconazole are effective antifungals in the treatment of Arabian horse ringworm.