What causes your hair's color to change? That has to do with the process controlling the production of the pigment called melanin, the same pigment that tans your skin in response to sunlight.
Every hair follicle contains pigment cells called melanocytes. The melanocytes produce eumelanin, which is black or dark brown, and pheomelanin, which is reddish-yellow, and pass the melanin to the cells which produce keratin, the chief protein in hair. When the keratin-producing cells (keratinocytes) die, they retain the coloring from the melanin. When you first start to go gray, the melanocytes are still present, but they become less active. Less pigment is deposited into the hair so it appears lighter. As graying progresses, the melanocytes die off until there aren't any cells left to produce the color.