Chrysanthemum zawadskii has been proven to possess hair growth activity and has been used as treatment for hair loss. The aim of this study was to provide a novel explanation of the mechanism by which Chrysanthemum zawadskii extracts (CZe) promote hair growth and to characterize the affected hair follicle (HF) regions and the progression of growth. The n-butanol and water fractions of CZe were used for hair growth induction by topical application to the backs of C57BL/6 mice for up to 30 days. To investigate cell development during HF morphogenesis, bromodeoxyuridine-labeled skin sections were detected using immunohistochemistry. The results showed that the water fraction of CZe promoted hair shaft production and induced premature entry of telogen HFs into the anagen. Subsequently, immunohistochemical studies indicated that the water fraction of CZe stimulated the differentiation and proliferation of pluripotent epidermal matrix cells in the matrix region and epithelial stem cells in the basal layer of the epidermis. Additionally, flavonoids were identified as effective constituents. Therefore, the findings of this study suggested that the water fraction of CZe may be developed as a therapeutic agent for the prevention of hair loss.