The present studies have demonstrated that the medulla and inner root sheath cells develop within their cytoplasm a protein that is unique in composition and is present in the trichohyalin granules. The protein is rich in arginine residues, some of which undergo a side-chain conversion in situ into citrulline residues. An unusual Ca2+-dependent enzyme activity distinguishable from cross-linking transamidase has been detected in the hair follicle and will act in vitro on trichohyalin protein as the natural substrate. The conversion in vivo must occur during the time that the medullary and inner root sheath cells move up the follicle and their cytoplasm fills with cross-linked protein containing citrulline. The function of citrulline in these proteins is not understood but its formation is a major process during hair growth.