Strong direct and indirect evidence supports an autoimmune etiology for alopecia areata. T lymphocytes that have been shown to be oligoclonal and autoreactive are predominantly present in the peribulbar inflammatory infiltrate. Alopecia areata frequently occurs in association with other autoimmune diseases, such as thyroiditis and vitiligo, and autoantibodies to follicular components have been detected. Finally, the use of immune modulating drugs, including corticosteroids and contact sensitizers such as dyphencyprone, can be beneficial in the management of this disease. Recent studies have demonstrated that alopecia areata scalp skin grafted onto nude mice with severe combined immunodeficiency grow hair and that infiltrating lymphocytes in the graft are lost. It is now also possible to induce alopecia areata in human scalp explants on these mice by injecting T lymphocytes with scalp homogenate. Neuropeptides produced by cutaneous nerves are known to modify immune reactivity and, in all likelihood, affect the alopecia areata process. Future studies may show that modulation of neuropeptide expression is associated with hair regrowth. Likewise, testing the efficacy of the newly developed immunomodulatory agents in patients with alopecia areata may lead to the introduction of novel therapies for this immune-mediated disease of the hair follicle.