The scientists working on the project had previously identified a set of immune cells involved in the destruction of hair and conducted a number of successful trials in mice before giving three patients with moderate to severe alopecia a twice daily dose of ruxolitinib.
Ruxolitinib, already approved for use in bone marrow conditions in Europe and the United States, saw total hair re-growth after five months in patients that took the medication.
The findings published in the journal Nature Medicine also revealed that these patients had previously lost at least a third of their hair but saw dramatic hair growth within this period of time.
Following these results, the scientists say more work is now needed to see if the drug can be offered more widely.
According to lead researcher Dr Raphael Clynes; "We've only begun testing the drug in patients, but if the drug continues to be successful and safe, it will have a dramatic positive impact on the lives of people with the disease."
Alopecia can cause severe, patchy baldness that is difficult to treat.
It is not related to the more common male-pattern hair loss that is thought to be driven by hormones.
Hair follicle cells are formed by differentiation of hair matrix cells at the upper dermal papilla, becoming hair and growing by division, growth and keratinization.
The growth of hair matrix cells and hair follicle cells decreases with the effects of the testosterone, stress and nutrition disorders. If growth decreases, the hair growth rate declines becoming thinner and resulting in the development and progression of alopecia.
Scientists say as the mechanisms behind this condition are different, the therapy is less likely to prove effective for this more common problem.