Adverse effects
Bitter taste and nausea are more common than most other adverse effects.The oral suspension form produces a number of adverse effects including but not limited to:
Diarrhea
Abdominal pain
Rarely, tachycardia, bronchospasm, facial swelling, muscle achesBoth the oral suspension and the topical form can cause:

Hypersensitivity reactions, including Stevens–Johnson syndrome in some cases 
Rash, itching, burning and acute generalized exanthematous pustulosis

Mechanism of action
Like amphotericin B and natamycin, nystatin is an ionophore. It binds to ergosterol, a major component of the fungal cell membrane. When present in sufficient concentrations, it forms pores in the membrane that lead to K+ leakage, acidification, and death of the fungus. Ergosterol is a sterol unique to fungi, so the drug does not have such catastrophic effects on animals or plants. However, many of the systemic/toxic effects of nystatin in humans are attributable to its binding to mammalian sterols, namely cholesterol. This is the effect that accounts for the nephrotoxicity observed when high serum levels of nystatin are achieved. Nystatin also impacts cell membrane potential and transport by lipid peroxidation. Conjugated double bonds in nystatins structure steal electron density from ergosterol in fungal cell membranes. Lipid peroxidation alters the hydrophilicity of the interior of channels in the membrane, which is necessary to transport ions and polar molecules. Disruption of membrane transport from nystatin results in rapid cell death. Lipid peroxidation by nystatin also contributes significantly to K+ leakage due to structural modifications of the membrane. Biosynthesis
Nystatin A1 (or referred to as nystatin) is biosynthesized by a bacterial strain, Streptomyces noursei.
It has been investigated for use in patients after liver transplantation, but fluconazole was found to be much more effective for preventing colonization, invasive infection, and death. It is effective in treating oral candidiasis in elderly people who wear dentures.It is also used in very low birth-weight (less than 1500 g or 3 lb 5oz o) infants to prevent invasive fungal infections, although fluconazole is the preferred treatment. It has been found to reduce the rate of invasive fungal infections and also reduce deaths when used in these babies.Liposomal nystatin is not commercially available, but investigational use has shown greater in vitro activity than colloidal formulations of amphotericin B, and demonstrated effectiveness against some amphotericin B-resistant forms of fungi. It offers an intriguing possibility for difficult-to-treat systemic infections, such as invasive aspergillosis, or infections that demonstrate resistance to amphotericin B. Cryptococcus is also sensitive to nystatin. Additionally, liposomal nystatin appears to cause fewer cases of and less severe nephrotoxicity than observed with amphotericin B.In the UK, its license for treating neonatal oral thrush is restricted to those over the age of one month.It is prescribed in units, with doses varying from 100,000 units (for oral infections) to 1 million (for intestinal ones). As it is not absorbed from the gut, it is fairly safe for oral use and does not have problems of drug interactions. On occasion, serum levels of the drug can be identified from oral, vaginal, or cutaneous administration, and lead to toxicity.