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Alopecia is a common condition that frequently poses a challenge to pathologists and dermatologists alike. Its' classification is still evolving, and there are several areas of overlap. From the therapeutic and prognostic point of view, it is vital to discriminate between scarring and nonscarring alopecia. Histopathology is the most valuable tool in diagnosis. This review attempts to give an overview of hair anatomy and histology and discusses a simple, practical, microscopy-based classification of the commonly encountered diseases. It emphasizes the importance of examining the biopsy under scanning magnification, which is often overlooked and can provide vital clues. Some of the diagnostic challenges are also highlighted.