Finasteride is a type 2 5a-reductase inhibitor and therefore mimics the biochemical profile of inherited type 2 5a-reductase deficiency in men. It was developed to grow hair in androgenetic alopecia and shrink benign prostatic hyperplasia. Various clinical trials of finasteride have confirmed its beneficial effects in androgenetic alopecia in males, but not in females. It can produce visible hair growth in up to 66% of men with mild to moderate alopecia, but importantly can stop hair loss in 91% of patients. In long-term finasteride studies, placebo patients were characterized by significant and progressive hair loss. It can be concluded that finasteride prevents further hair loss by actually continuing to grow enough hair to preserve scalp coverage. This is confirmed by the loss of hair following withdrawal of finasteride in such cases. The proven preservative effect of finasteride, in addition to its restorative effect, is a strong indication for prescribing it in early cases of androgenetic alopecia before much hair has been lost.