The present paper deals with the development of stability indicating a reversed phase high-performance liquid chromatographic (RP-HPLC) method for leflunomide, a disease-modifying antirheumatic drug in presence of its degradation products formed during forced decomposition studies. Forced degradation studies were performed on the bulk drug by using acid (0.1 N hydrochloric acid), base (0.1 N sodium hydroxide), water (neutral hydrolysis), 3% v/v hydrogen peroxide (oxidation), dry heat (60°C) and UV light (254 nm). Degradation was observed for leflunomide in acidic and basic media only and the formed degradation products were found to be 5-methylisoxazole-4-carboxylic acid (degradation product-1) and 4-(trifluoromethyl)-aniline (degradation product-2). Successful separation of the drug from the degradation products formed under different stress conditions was achieved on a Novapak C18 column (150 mm × 3.9 mm, 4 µm particle size) using methanol- phosphate buffer (pH 5.3; 20 mM) (7:3, v/v) as the mobile phase at a flow rate of 1 mL/min. The detection wavelength was 260 nm. The developed method was completely validated and proved to be robust. As the method could effectively separate the drug from its degradation products, it can be employed for analysis of the samples of stability study.