A 27-year-old woman with a known history of lupus erythematosus presented with two circumscribed patches of non-scarring alopecia closely resembling alopecia areata. Scalp biopsy showed a predominantly subcutaneous and deep dermal lymphocytic infiltrate that surrounded the deep follicular segments and hair bulbs, as well as the eccrine glands. There was associated hyaline fat sclerosis. The epidermis, infundibular and isthmus segments of follicles were relatively spared and lacked the lichenoid inflammation and fibrosis seen with lupus erythematosus. The biopsy findings illustrate that the deep variant of lupus panniculitis may be concentrated around the hair bulbs and deep temporary segments of hair follicles and spare the permanent stem cell-rich follicular segments. This pattern is capable of producing a temporary hair-loss, clinically simulating alopecia areata. The clinical history, presence of subtle erythema and scalp tenderness on physical examination, as well as the biopsy findings, were important clues in distinguishing our case from a true combination of alopecia areata and lupus erythematosus.