Toluene reacts with potassium permanganate to yield benzoic acid, and with chromyl chloride to yield benzaldehyde ( Étard reaction). Importantly, the methyl side chain in toluene is susceptible to oxidation. It undergoes sulfonation to give p-toluenesulfonic acid, and chlorination by Cl 2 in the presence of FeCl 3 to give ortho and para isomers of chlorotoluene. Because the methyl group has greater electron-releasing properties than a hydrogen atom in the same position, toluene is more reactive than benzene toward electrophiles. Toluene reacts as a normal aromatic hydrocarbon in electrophilic aromatic substitution. In 1850, French chemist Auguste Cahours isolated from a distillate of wood a hydrocarbon which he recognized as similar to Deville's benzoène and which Cahours named toluène.

In 1843, Jöns Jacob Berzelius recommended the name toluin.

In 1841, French chemist Henri Étienne Sainte-Claire Deville isolated a hydrocarbon from balsam of Tolu (an aromatic extract from the tropical Colombian tree Myroxylon balsamum), which Deville recognized as similar to Walter's rétinnaphte and to benzene hence he called the new hydrocarbon benzoène. The compound was first isolated in 1837 through a distillation of pine oil by the Polish chemist Filip Walter, who named it rétinnaphte.

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