Psoriasis does not only exist on the skin but also affects hair. Psoriasis of scalp is quite common which involves dry flaky scalp and graying of hair. Like other forms of psoriasis, scalp psoriasis occurs when your body's immune system mis-identifies the skin as being foreign. Under normal circumstances the body makes white blood cells, called T-cells, which should only attack invaders such as viruses, bacteria or fungi. When you have scalp psoriasis, these T-cells accidentally attack your scalp. This causes the scalp to become inflamed, and a cascade of other immune system events result in scalp damage.