Alopecia areata (AA) is one of the most prevalent autoimmune diseases, yet the development of innovative therapeutic strategies has been hampered by an incomplete understanding of disease pathogenesis, such as the complex immunological mechanisms that underlie AA pathogenesis. Here, we performed single-cell RNA sequencing (scRNAseq) of skin-infiltrating immune cells from the well-established graft-induced C3H/HeJ mouse model of AA, together with antibody-based depletion experiments to systematically interrogate the role of specific immune cell types in disease pathophysiology in vivo. Since AA is a predominantly T cell-mediated disease, we focused on dissecting the function of lymphocyte subsets in AA. Both our scRNAseq and functional studies established that CD8+ T cells, whose depletion was sufficient for both disease prevention and reversal, are the main disease-driving cell type in AA. Focused computational analyses of CD8+ T cells identified five CD8+ T cell subsets, ranging from naïve cells to effector and resident T cell populations. CD8+ T cell heterogeneity in AA was defined by an ‘effectorness gradient’ in which CD8+ T cells formed a continuum of interrelated transcriptional states that culminated in increased effector function and tissue residency, as opposed to discrete mutually exclusive populations. Our findings also confirmed a role for CD4+ T helper cells in disease initiation and demonstrated that regulatory T cells are protective against AA. Depletion of natural killer cells, B cells, and γδ T cells had no effect on disease prevention or reversal. Guided by our scRNAseq analyses, we performed a highly comprehensive, systematic interrogation of lymphocyte heterogeneity in AA, and uncovered a novel ‘effectorness gradient’ framework for AA-associated CD8+ T cells with implications for the design of future therapeutics.