The application and analysis of single-cell transcriptomics in toxicology presents unique challenges. These include identifying cell sub-populations sensitive to perturbation; interpreting dynamic shifts in cell type proportions in response to chemical exposures; and performing differential expression analysis in dose-response studies spanning multiple treatment conditions. This review examines these challenges while presenting best practices for critical single cell analysis tasks. This covers areas such as cell type identification; analysis of differential cell type abundance; differential gene expression; and cellular trajectories. Towards enhancing the use of single-cell transcriptomics in toxicology, this review aims to address key challenges in this field and offer practical analytical solutions. Overall, applying appropriate bioinformatic techniques to single-cell transcriptomic data can yield valuable insights into cellular responses to toxic exposures.