Dandruff is a recurrent chronic scalp disorder, affecting majority of the population worldwide. Recently a metagenomic study of the Indian scalp microbiome described an imperative role of bacterial commensals in providing essential vitamins and amino acids to the scalp. Coconut oil and its formulations are commonly applied on the scalp in several parts of the world to maintain scalp health. Thus, in this study we examined the effect of topical application of coconut oil on the scalp microbiome (bacterial and fungal) at the taxonomic and functional levels and their correlation with scalp physiological parameters. A 16-weeks-long time-course study was performed including 12-weeks of treatment and 4-weeks of relapse phase on a cohort of 140 (70 healthy and 70 dandruff) Indian women, resulting in ~ 900 metagenomic samples. After the treatment phase, an increase in the abundance of Cutibacterium acnes and Malassezia globosa in dandruff scalp was observed, which were negatively correlated to dandruff parameters. At the functional level, an enrichment of healthy scalp-related bacterial pathways, such as biotin metabolism and decrease in the fungal pathogenesis pathways was observed. The study provides novel insights on the effect of coconut oil in maintaining a healthy scalp and in modulating the scalp microbiome.