With age, the pigment cells in the follicle gradually die off. As they do so, that strand will no longer contain as much color and will show up as silver, gray, or white as it grows. Eventually, all the pigment cells will die and the hair becomes completely gray.

The age at which you go gray is determined by your genes. A ballpark guess can be made by observing the ages at which your parents or grandparents went gray. Some people go gray at young ages–as early as high school–whereas some may not go gray before their forties or fifties. For example, most Caucasian women show their first gray hairs during their mid thirties.

Graying typically occurs over a long time. From the time that a person notices the first gray strands, it can take ten years or more to complete the process.

While genetics is the most common cause of gray hair, other things can contribute to graying. Lack of B vitamins (particularly pantothenic acid, poor nutrition, anemia, (lack of iron in the blood), thyroid problems, and even smoking can contribute to graying. Smokers are believed to gray at an earlier rate because smoking depletes oxygen in the bodies tissues.

Treatment for diseases, such as cancer, or AIDS, can also cause hair to turn gray.

It has been said that a shock can cause people to go gray overnight but that theory has generally been discounted.

Although parents often like to claim that the stess of having children has caused them to go gray, this theory has also been discounted.
References :
My Experience (With Science)