Light and electron microscopic studies have been carried out on fifteen regrowing white anagen hair follicles from seven patients with alopecia areata. Seven bulbs showed evidence of cell injury that was concentrated in cortical keratocytes. Lower bulb matrix cells appeared undamaged though in six bulbs apoptotic degeneration was seen in the lower bulb keratocytes, perhaps indicating early catagen transformation. Melanocytes were identified in all the bulbs except those from one patient. The number of melanocytes and their melanization were much less than in the normal pigmented follicle, and pigment transfer was rarely seen. It is proposed that alopecia areata is a disease of differentiating cortical keratocytes. The failure of pigmentation in the regrowing white hair may be post-inflammatory, but the various other pigmentary features of alopecia areata, especially the sparing of senile white hairs, suggest that pigmentary mechanisms in the hair bulb are of primary importance in the pathogenesis of this disorder.