As well as men embarrassed by natural hair loss, the technique could transform treatment options for women with hair loss, the researchers said.
The best current treatment option for women with hair loss is a transplant, but one common obstacle is a lack of available donor hair.
The study, published in the Proceedings of the National Academy of Sciences journal, could also be an "important step" in developing replacement skin with hair follicles for burn patients, the scientists claimed.
Experiments using rat cells more than 40 years ago had previously suggested that the new technique was possible, but scientists have until now been unable to replicate the work in humans.
The major obstacle has been the fact that human dermal papilla cells do not clump together as easily as the rodent equivalent when grown in the lab, meaning they do not create a natural "tissue environment".
To overcome the problem, researchers grew the cells in a 3D culture which encouraged them to form in clumps and stimulated the growth of new follicles.
The new tissue was grafted in between the dermis and epidermis layers of human foreskin and the whole structure was grafted onto the backs of mice.
Six weeks later, new hair follicles had appeared in five of the seven samples, which were a genetic match for the donors. In two cases, unpigmented hair shafts were found protruding from the skin.
Study co-author Professor Colin Jahoda, of Durham University, said: "Ultimately we think that this study is an important step toward the goal of creating a replacement skin that contains hair follicles for use with, for example, burn patients."
Dr Angela M Christiano, of Columbia University, added that the research "has the potential to transform the medical treatment of hair loss".
"Current hair-loss medications tend to slow the loss of hair follicles or potentially stimulate the growth of existing hairs, but they do not create new hair follicles," she explained. "Neither do conventional hair transplants, which relocate a set number of hairs from the back of the scalp to the front.
"Our method, in contrast, has the potential to actually grow new follicles using a patient's own cells. This could greatly expand the utility of hair restoration surgery to women and to younger patients."
Prof Sheila MacNeil, Professor of Tissue Engineering at the University of Sheffield, who was not involved in the study, added: "This is a really useful piece of information showing that if attention is paid to keeping human dermal papilla cells together in sufficiently high numbers then they can act to send a signal to 'grow hair' when transplanted into human skin grafted onto mice as a test bed model.
"It really adds to our understanding of what is needed for cells to signal to each other and opens up an approach to further research towards clinical translation. This is ground-breaking work – congratulations to this creative team."
Source : http://telegraph.feedsportal.com/c/32726/f/568612/s/32bafaa6/sc/32/l/0L0Stelegraph0O0Chealth0Chealthnews0C10A3949110CBaldness0Etreatment0Ea0Estep0Ecloser0Bhtml/story01.htm