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Cellular membranes are essential for compartmentalization, maintenance of permeability, and fluidity in all three domains of life. Archaea belong to the third domain of life and have a distinct phospholipid composition. Membrane lipids of archaea are ether-linked molecules, specifically bilayer-forming dialkyl glycerol diethers (DGDs) and monolayer-forming glycerol dialkyl glycerol tetraethers (GDGTs). The antifungal allylamine terbinafine has been proposed as an inhibitor of GDGT biosynthesis in archaea based on radiolabel incorporation studies. The exact target(s) and mechanism of action of terbinafine in archaea remain elusive. <i>Sulfolobus acidocaldarius</i> is a strictly aerobic crenarchaeon thriving in a thermoacidophilic environment, and its membrane is dominated by GDGTs. Here, we comprehensively analyzed the lipidome and transcriptome of <i>S. acidocaldarius</i> in the presence of terbinafine. Depletion of GDGTs and the accompanying accumulation of DGDs upon treatment with terbinafine were growth phase-dependent. Additionally, a major shift in the saturation of caldariellaquinones was observed, which resulted in the accumulation of unsaturated molecules. Transcriptomic data indicated that terbinafine has a multitude of effects, including significant differential expression of genes in the respiratory complex, motility, cell envelope, fatty acid metabolism, and GDGT cyclization. Combined, these findings suggest that the response of <i>S. acidocaldarius</i> to terbinafine inhibition involves respiratory stress and the differential expression of genes involved in isoprenoid biosynthesis and saturation.