Fungal toenails are caused by microscopic organisms called fungi. Generally, a kind of fungi called dermatophytes are the culprits, but this condition can occasionally be caused by mold or yeast as well. Fungi grow well in warm, damp places, turning pools, public restrooms, locker rooms, and gyms into easy breeding grounds. Injuries to the nail, too-tight footwear, heavy sweating, and pre-existing conditions that weaken the immune system, like diabetes, increase the risk of contracting a toenail infection. Affected nails are usually discolored, thick, brittle, ragged or crumbly, and could even smell foul.