Hair growth depends on a close interaction of different cell populations of the hair follicle. In certain regions of the body, androgens interfere with this highly regulated cooperation in a yet poorly understood manner. The response of hair follicles to androgens can be categorized as androgen-dependent, e.g. in the beard, androgen-sensitive, e.g. in the frontal scalp of affected individuals, or androgen-independent, e.g. in the occipital scalp. At the target cell level, the balance between 5 alpha-reductase, 17 beta-hydroxysteroid-dehydrogenase (17 beta-HSD) and 3 alpha-hydroxysteroid dehydrogenase (3 alpha-HSD) yields metabolites with different androgenic potential. We examined this target cell-specific androgen metabolism in microdissected intact sub-units of dermal papillae, connective tissue sheaths (CTS) and root sheaths. In dermal papillae, 5 alpha-reductase predominated with an accumulation of the strong androgen 5 alpha-dihydrotestosterone. The specific activity of 5 alpha-reductase in the papillae exceeded those in the other hair follicle compartments by a factor of at least 14 in the scalp (5.4, 0.4 and 0.1 pmol/h per mm3 in the papilla, CTS and root respectively and at least 80 in the beard (16.0, 0.2 and 0.4 pmol/h per mm3 in the papilla, CTS and root respectively). The root sheath keratinocytes expressed low 5 alpha-reductase levels, but high 17 beta-HSD levels, with androstenedione as the major metabolite. The CTS expressed both 5 alpha-reductase and 17 beta-HSD, resulting in androstenedione, 5 alpha-androsterone and 5 alpha-androstanedione. In the CTS and the root sheath, only minor amounts of 5 alpha-DHT were found. In beard papillae, the 5 alpha-reductase activity was three times that in the occipital scalp papillae. These results indicate that the androgen response of hair follicles depends on a differentiated intrafollicular androgen metabolism and that the dermal papilla might be a primary target in this process.