 Dandruff flakes: a common sign on the collar |
They hope a detailed knowledge of the genome of Malassezia globosa could lead to more effective treatments which block its growth.
The fungus lives and feeds on human skin, causing the itching and flaking associated with the condition.
The study, led by the firm Procter and Gamble, appears in Proceedings of the National Academy of Sciences.
A complete genomic sequencing of a Malassezia genome opens tremendous opportunities for researchers to understand the interactions of fungi and humans 
It is thought that about half the human population suffers from dandruff. Men tend to be more susceptible.
There are up to 10 million M. globosa fungi on the average human head.
The fungus, which is genetically related to yeast, feeds on sebum, the oily product produced by the sebaceous glands found in the skin.
Sebum acts to protect and waterproof hair and skin, and keep them from becoming dry, brittle and cracked.
It is made of fat and the debris of dead fat-producing cells.
M. globosa turned out to be one of the simplest organisms ever sequenced genetically by scientists, 300 times smaller than the human genome, with just 4,285 genes.
It has no ability to manufacture its own fatty acids, which are essential for life, and so relies on human sebum for its source.
Enzyme role
The latest research has revealed that the fungus causes dandruff by producing enzymes called lipases.
First, the fungus uses lipases to break down sebum, creating a compound called oleic acid.
This then penetrates the top layer of skin and triggers a faster turnover of skin cells than usual in susceptible people, resulting in dandruff.
The researchers found that the fungus produces a total of eight types of lipase, along with three phospholipases, which it uses to digest the oils from the scalp.
Each of these proteins could, they suggest, be a possible therapeutic target for new anti-dandruff preparations.
They also discovered that the fungus has the genetic potential to mate - although this has never been observed.
Researcher Dr Thomas Dawson said: "A complete genomic sequencing of a Malassezia genome opens tremendous opportunities for researchers to understand the interactions of fungi and humans."
Current medicated shampoos help to control fungal infections, but they are not 100% reliable.
It was only five years ago that scientists discovered that M. globosa was the cause of most cases of dandruff.
To decode the genome scientists grew ten litres of the fungus in a tank, and froze it in liquid nitrogen, before smashing it up into tiny fragments, and extracting its DNA.
Dr Bav Shergill, dermatologist for the British Skin Foundation, said: "We welcome any research into this troubling condition that affects the lives of so many individuals."
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