Modern hair restoration surgery is based on a technique known as follicular unit transplantation, in which follicular units are the exclusive structures used as hair grafts. In Part 1 of this 2-part review, we describe how the techniques employed in hair transplantation have evolved into their present forms. Anatomic concepts of specific relevance for dermatologists are discussed, including the distribution and ex vivo morphology of scalp follicular units. Male androgenetic alopecia and female pattern hair loss are the most common reasons for hair loss consultations with dermatologists and will be the primary focus of this review. However, because not all hair disorders are suitable for transplantation, this review will also describe which scalp conditions are amenable to surgery and which are not. Guidelines are provided to help dermatologists better define good and bad candidates for hair transplantation. Other conditions for which hair transplantation surgery is indicated are reviewed.