Caffeine is widely used in cosmetics and hair care products. Although its efficacy in stimulating hair growth has been confirmed in recent studies, its mechanism of action remains unelucidated. The present study aimed to determine the effects of caffeine on hair growth, with a focus on intracellular hair follicle activity. Experiments included in vitro and ex vivo tests, and a clinical study. Caffeine enhanced the cellular activity and potassium channel opening. It also promoted human hair follicle elongation. Immunohistochemical staining showed that the Ki-67 signal was significantly higher in cells treated with caffeine. These efficacies of caffeine were comprehensively demonstrated in clinical results, wherein caffeine-containing shampoo improved hair density after 24 weeks of testing. Collectively, the results of this study demonstrated that caffeine promoted hair growth and inhibited the progression of hair loss by enhancing intracellular activity of hair follicles.