<p>Alopecia areata (AA) is a recurrent, autoimmune nonscarring hair loss disorder, with cytotoxic T-cell mediated follicle destruction. Various treatment options with different efficacy and safety profiles were investigated for AA. The aim of this study was to assess the efficacy of topical metformin (10% or 20%) versus topical potent steroid in promoting hair regrowth in AA patients. Metformin topical gel (10% and 20% concentrations) was prepared. The pharmacokinetic profile of the prepared formulations was tested on six albino rats. Sixty patients with mild to moderate AA were divided equally into three groups; first and second groups received topical metformin gel 10% and 20%; respectively, applied three times per week, then gradually increased to once daily application until improvement or a maximum duration of three months. The third group received topical clobetasol propionate 0.05% cream once daily. Patients’ treatment response was evaluated using the Severity of Alopecia Tool (SALT) score, a hair pull test, and trichoscopy. Side effects, recurrency within three months, and patients’ satisfaction were also recorded. The prepared metformin gel (both 10% and 20%) showed good tolerability, limited systemic exposure without reported side effects. Topical metformin 10% and 20% resulted in a significant improvement in the SALT scores (<i>p</i> &lt; 0.001, <i>p</i> = 0.001; respectively), with new hair regrowth in 60%, and 65% of patients, respectively. Topical steroid resulted in a significant improvement in the SALT score (<i>p</i> = 0.002), with new hair regrowth in 85% of patients. The hair pull test results showed improvement only with topical metformin 20% (<i>p</i> = 0.039). Only one patient developed scalp irritation with topical metformin 20%, and one patient had recurrent AA with topical metformin 10%. In conclusion, topical metformin gel was equally effective and safe as topical steroid in AA treatment.</p>