In the 1970s minoxidil was being used to treat high blood pressure when it was found to have some unexpected side effects. If applied directly to the scalp it appeared not only to arrest hair loss, but also to stimulate the growth of existing hair - making it thicker and longer. The manufacturers (Upjohn) realized the potential of what they had discovered and began to test the medicine as a hair loss treatment.
The scientific jury is still out on exactly how minoxidil stabilizes hair loss. One theory is that it works by increasing the blood (and nutrient) flow to the hair follicles; while another school has it that minoxidil directly stimulates DNA synthesis in follicle cells. For a large percentage of users understanding exactly how minoxidil works isn't important, the point is that it does.
Minoxidil is a topical medication (which means that it's applied directly to the scalp - rather than administered orally) and can be bought over the counter. Depending on which brand you choose you'll be supplied with one of a variety of pipettes to help with the twice daily application. Concentrations vary from 2-12.5% the higher strengths haven't yet met with FDA approval. This doesn't necessarily mean that they are unsafe, as often it's just a question of time. If you have any concerns consult your dermatologist.
Results vary from individual to individual and it's important to remember that there's no such thing as a quick fix, so don't expect miracles. Minoxidil is effective at slowing and even halting hair loss, however actual re-growth is limited. As minoxidil only acts on living follicles it has no affect on any part of the head that is already totally bald.