Anagen stage hair follicles (HFs) exhibit “immune privilege (IP)” from the level of the bulge downwards to the bulb. Both passive and active IP mechanisms protect HFs from physiologically undesired immune responses and limit immune surveillance. IP is relative, not absolute, and is primarily based on absent, or greatly reduced, intra‐follicular antigen presentation via MHC class I and II molecules, along with prominent expression of “no danger” signals like CD200 and the creation of an immunoinhibitory signalling milieu generated by the secretory activities of HFs. Perifollicular mast cells, Tregs and other immunocytes may also contribute to HF IP maintenance in healthy human skin. Collapse of anagen hair bulb IP is an essential prerequisite for the development of alopecia areata (AA). In AA, lesional HFs are rapidly infiltrated by NKG2D + T cells and natural killer (NK) cells, while perifollicular mast cells acquire a profoundly pro‐inflammatory phenotype and interact with autoreactive CD8+ T cells. Using animal models, significant functional evidence has accumulated that demonstrates the dominance of the immune system in AA pathogenesis. Purified CD8+T‐cell and NK cell populations alone, which secrete fγ, suffice to induce the AA phenotype, while CD4+T‐cells aggravate it, and Tregs and iNKT cells may provide relative protection against AA development. While IP collapse may be induced by exogenous agents, inherent IP deficiencies might confer increased susceptibility to AA for some individuals. Thus, a key goal for effective AA management is the re‐establishment of a functional HF IP, which will also provide superior protection from disease relapse.