A short and sensitive stability-indicating gradient RP-UPLC method was developed for the quantitative determination of process-related impurities and degradation products of tolterodine tartrate in pharmaceutical formulations. The method was developed by using the Waters ACQUITY UPLC™ BEH shield RP18 (2.1 × 100 mm, 1.7 μm) column with a mobile phase containing a gradient mixture of solvent A and B at a detection wavelength of 210 nm. During the stress study, the degradation products of tolterodine tartrate were well-resolved from tolterodine and its impurities and the mass balances were found to be satisfactory in all the stress conditions, thus proving the stability-indicating capability of the method. The developed method was validated as per ICH guidelines with respect to specificity, linearity, limit of detection and quantification, accuracy, precision, ruggedness, and robustness. During the stability (40°C/75% RH, 3 months) analysis of the drug product, one unknown impurity was detected by the above stability-indicating method. The unknown impurity was isolated by preparative HPLC and subjected to mass and NMR studies. Based on the spectral data, the unknown impurity was characterised as 2-(3-amino-1-phenylpropyl)-4-methylphenol (des-N,N-diisopropyl tolterodine). Structural elucidation of the impurity by spectral data is discussed in detail.