This study examined why hair follicles shrink and thin in androgenetic alopecia (AGA), a common form of hair loss, by focusing on the decline of special hair-regenerating cells. Using advanced spatial profiling technology, we compared scalp tissue from AGA patients and healthy individuals, specifically analyzing gene activity in the regions containing these regenerative cells. We found that genes involved in scar tissue formation and cell identity changes—such as FN1, TWIST1, and TGFB2—were much more active in these areas in AGA patients. The corresponding proteins were also found at higher levels, confirming their involvement. This increased gene activity creates a harmful environment around the hair follicle, encouraging fibrosis (scar formation) and loss of regenerative cells, which likely contributes to ongoing hair thinning. Additionally, immune cells gathering near the hair follicle opening appear to influence this damaging process, suggesting that inflammation also plays a role. By identifying exactly where and how these changes occur, we highlight potential new targets for AGA treatment and advances our understanding of the underlying causes of this type of hair loss.