American uncle skinned toad in island nation (5)
I believe the answer is:
samoa
'island nation' is the definition.
(country made up of several islands)
'american uncle skinned toad' is the wordplay.
'american uncle' becomes 'Sam' (Uncle Sam is a nickname for the USA).
'skinned' indicates the central letters.
The centre of 'toad' is 'oa'.
'sam'+'oa'='SAMOA'
'in' acts as a link.
(Other definitions for samoa that I've seen before include "Group of Polynesian 14s" , "Polynesian isle" , "South Pacific island nation" , "Pacific island nation, capital Apia" , "Southwest Pacific island group" .)