A dissecting punch and tool configured for the dissection of follicular units from the donor area of a patient, such as for subsequent implantation of a follicular unit graft (FUG) in a recipient area for hair restoration, and method for using the tool. The method includes aligning the dissecting punch over a follicular unit so that hair follicles are disposed within the lumen. The dissecting punch is then moved through the dermis layer and into the fatty tissue layer of the skin to dissect the follicular unit from the tissue surrounding the follicular unit. The dissecting punch includes a non-circular shaft segment to reduce the transection rate of the follicular units during dissection.
