A cream or ointment may soon cure baldness or stop hair turning grey, a new study suggests.
The cells that makes hairs and turns it grey was accidentally discovered by US scientists as they explored how certain cancer tumours form.
The breakthrough could one day identify possible treatments for balding and hair greying and also explain why we age.
Associate Professor of Dermatology Dr Lu Le at UT Southwestern Medical Centre said: "Although this project was started in an effort to understand how certain kinds of tumours form, we ended up learning why hair turns grey and discovering the identity of the cell that directly gives rise to hair
"With this knowledge, we hope in the future to create a topical compound or to safely deliver the necessary gene to hair follicles to correct these cosmetic problems."
The study found the protein called KROX20, more commonly associated with nerve development, turned on in skin cells that become the hair shaft.
These hair precursor, or progenitor, cells then produce a protein called stem cell factor (SCF) which is essential for hair pigmentation.
When scientists deleted the SCF gene in the hair progenitor cells in mice, their hair turned white.
When they deleted the KROX20-producing cells, no hair grew and the mice became bald.
Prof Le made the discovery while studying a disorder called Neurofibromatosis Type 1, a rare genetic disease that causes tumours to grow on nerves.
Scientists already knew stem cells contained in a bulge area of hair follicles are involved in making hair and that SCF is important for pigmented cells.
What they did not know in detail was what happens after those stem cells move down to the base, or bulb, of hair follicles and which cells in the hair follicles produce SCF - or that cells involved in hair shaft creation make the KROX20 protein.
If cells with functioning KROX20 and SCF are present, they move up from the bulb, interact with pigment-producing melanocyte cells, and grow into pigmented hairs.
But without SCF, the hair in mouse models was grey, and then turned white with age,
Without KROX20-producing cells, no hair grew.
Future research will try to find out if the KROX20 in cells and the SCF gene stop working properly as people age, leading to the greying and hair thinning seen in older people, as well as in male pattern baldness.
The research also could provide answers about why we age in general as hair greying and hair loss are among the first signs of ageing.
The study was published in Genes & Development.