Dihydrotestosterone (DHT) is a male sex hormone, it is produced in various places including adrenal glands, prostate gland, testes and even hair follicles. It is produced by the enzyme 5-Alpha reductase. The enzyme works by reducing testosterone (a steroid hormone from the androgen group). DHT is thought to be a primary contributing factor in male pattern baldness. It should be noted that female hair loss is not associated with DHT, this is not surprising as women tend to have much lower levels of testosterone.
Within the hair follicle structure there is the dermal papilla. This part is import in hair growth. The cells within this part of the follicle multiply to form new hair follicles. This part is contacted directly with the blood capillaries within the skin. This is how the nutrients get into the hair follicle. The papilla is full of receptors for hormones such as testosterone and DHT, this is thought to be how the interaction of hair loss and DHT occurs. As expected in women there are many less of these receptors on the hair follicle. It is thought that the presence of DHT stimulates these receptors and makes the hair follicles shrink potentially due to nutrient restriction on the hair follicle, the hairs will then suffer miniaturization and will then tend to fall off. DHT triggers a build up of a waxy accumulation near the root of the hair.