In recent years hair has become a fundamental biological specimen, alternative to the usual samples blood and urine, for drug testing in the fields of forensic toxicology, clinical toxicology and clinical chemistry. Moreover, hair-testing is now extensively used in workplace testing, as well as, on legal cases, historical research etc. This article reviews methodological and practical issues related to the application of hair as a biological indicator of drug use/abuse or of chronic exposure to environmental toxicants. Hair structure and the mechanisms of drug incorporation into it are commented. The usual preparation and extraction methods as well as the analytical techniques of hair samples are presented and commented on. The outcomes of hair analysis have been reviewed for the following categories: drugs of abuse (opiates, cocaine and related, amphetamines, cannabinoids), benzodiazepines, prescribed drugs, pesticides and organic pollutants, doping agents and other drugs or substances. Finally, the specific purpose of the hair testing is discussed along with the interpretation of hair analysis results regarding the limitations of the applied procedures.