Onychomycosis is fungal infection of one or more of the nail units. However, because fungi cause only about half of all nail dystrophies, the use of appropriate diagnostic techniques is important to ensure correct diagnosis and treatment. Aim of the present study was to compare direct microscopy, culture and HPE-PAS for diagnosis of onychomycosis by evaluating their sensitivity and various other relevant statistical parameters. A prospective, hospital-based, cross-sectional study was conducted on 216 patients with a high degree of clinical suspicion of onychomycosis. Nail specimens were evaluated using three diagnostic methods, i.e. direct microscopy using 20% Potassium hydroxide (KOH) & 40% Di-methyl-suphoxide (DMSO), culture and histopathological examination using PAS stain (HPE-PAS). Of 216 patients direct microscopy was positive in 138 (63.9%), culture in 147 (68%) and HPE-PAS in 164 patients (76%). One hundred and seventy-nine patients fitted into the criteria set for confirmed diagnosis of onychomycosis. Using this as a denominator; direct microscopy, culture and HPE-PAS had sensitivities of 77.1%, 70% and 91.6% respectively. Also, HPE-PAS showed the highest sensitivity of 94.7% in 19 cases with prediagnostic antimycotic treatment compared to direct microscopy (42.1%) or culture (57.9%). HPE-PAS shows high sensitivity for diagnosis of onychomycosis and can be considered as a gold standard in the diagnosis of onychomycosis.