For many years, clinical observations have suggested that there is an intrinsic connection between psychological state and skin diseases. Stress responses are typically mediated by several hormones, which are modulated via the hypothalamic‐pituitary‐adrenal axis. This typical stress response is not only one theory for psychiatry disorder pathophysiology, but it also modifies hair growth by altering the skin's inflammatory environment. Given that different forms of hair loss, such as androgenetic alopecia, alopecia areata, or telogen effluvium, and hair follicle cycling can be altered by immune cells within the follicle milieu, we hypothesized that specific forms of hair loss are correlated to psychiatric illnesses. To address this, we conducted a systematic review by searches in April and May 2021 through Ovid MEDLINE and PUBMED (ranging from 1951 to the present day), identifying 179 reports. A further 24 reports were identified through website and citation searches giving a total of 201 reports. After applying exclusion criteria, 21 papers were reviewed, and 17 were included for data analysis. It is undeniable that hair loss greatly affects Health‐related Quality of Life (HrQol) and it is heavily associated with major depressive disorder and anxiety. The correlation between hair loss and mental health disorders was significant, however, due to the low number of publications with quantitative data we were not able to identify correlations between each hair loss type with each psychiatric disorder. Further studies to better connect specific hair loss diseases to specific disorders are therefore critical in bettering the way both psychiatric disease, and hair loss, are managed.