Alopecia areata (AA) is among the most prevalent autoimmune diseases, but the development of innovative therapeutic strategies has lagged due to an incomplete understanding of the immunological underpinnings of disease. Here, we performed single-cell RNA sequencing (scRNAseq) of skin-infiltrating immune cells from the graft-induced C3H/HeJ mouse model of AA, coupled with antibody-based depletion to interrogate the functional role of specific cell types in AA in vivo. Since AA is predominantly T cell-mediated, we focused on dissecting lymphocyte function in AA. Both our scRNAseq and functional studies established CD8+ T cells as the primary disease-driving cell type in AA. Only the depletion of CD8+ T cells, but not CD4+ T cells, NK, B, or γδ T cells, was sufficient to prevent and reverse AA. Selective depletion of regulatory T cells (Treg) showed that Treg are protective against AA in C3H/HeJ mice, suggesting that failure of Treg-mediated immunosuppression is not a major disease mechanism in AA. Focused analyses of CD8+ T cells revealed five subsets, whose heterogeneity is defined by an "effectorness gradient" of interrelated transcriptional states that culminate in increased effector function and tissue residency. scRNAseq of human AA skin showed that CD8+ T cells in human AA follow a similar trajectory, underscoring that shared mechanisms drive disease in both murine and human AA. Our study represents a comprehensive, systematic interrogation of lymphocyte heterogeneity in AA and uncovers a novel framework for AA-associated CD8+ T cells with implications for the design of future therapeutics.