This paper presents stability study of the nonsteroidal anti-inflammatory drug (NSAID) nepafenac. In order to investigate stability of nepafenac, it was subjected to forced degradation under different stress conditions: acid and base hydrolysis, oxidation, humidity, heat and light. A novel stability indicating reverse phase ultra high performance liquid chromatographic (UHPLC) method coupled to ultraviolet detector has been developed to separate nepafenac and all related compounds (2-aminobenzophenone, Cl-thionepafenac, thionepafenac, Cl-nepafenac, hydroxy-nepafenac, and cyclic-nepafenac). Efficient chromatographic separation was achieved on a Waters Acquity BEH C18 stationary phase with a gradient elution. Quantification was carried out at 235 nm at a flow rate of 0.6 mL/min−1. The resolution between nepafenac and six potential impurities is found to be greater than 2.0. The developed method was validated with respect to specificity, LOD, LOQ, linearity, precision, accuracy and robustness. The r2 values for nepafenac and six potential impurities were all greater than 0.999. The developed method is capable to detect impurities of nepafenac at a level of 0.005% with respect to test concentration of 1.0 mg/mL. Significant degradation is observed in acid, base and oxidative degradation conditions and degradation products (DPs) were identified using mass spectrometry analysis; two of them were found to be a known process related impurities (hydroxy- and cyclic-nepafenac) whereas four degradation products were identified as new degradation impurities. The forced degradation samples were assayed against a qualified reference standard and the mass balance was found to be close to 99.5%.