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In 1997, a research team led by David Julius of UCSF showed that capsaicin selectively binds to a protein known as TRPV1 that resides on the membranes of pain and heat sensing neurons.[28] TRPV1 is a heat activated calcium channel, which opens between 37 and 45 °C. When capsaicin binds to TRPV1, it causes the channel to open below 37 °C (normal human body temperature), which is why capsaicin is linked to the sensation of heat.

Prolonged activation of these neurons by capsaicin depletes presynaptic substance P, one of the body's neurotransmitters for pain and heat. Neurons that do not contain TRPV1 are unaffected.

The result appears to be that the chemical mimics a burning sensation, the nerves are overwhelmed by the influx, and are unable to report pain for an extended period of time. With chronic exposure to capsaicin, neurons are depleted of neurotransmitters, leading to reduction in sensation of pain and blockade of neurogenic inflammation. If capsaicin is removed, the neurons recover.

Capsaicin is being explored as a possible prophylaxis for Type 1 diabetes by researchers in Toronto, Canada; capsaicin was injected subcutaneously affecting pancreatic sensory nerves of mice with Type 1 diabetes because of a suspected link between the nerves and diabetes.[29]

In addition, Capsicum kills cancer cells efficiently...

The American Association for Cancer Research reports studies suggesting capsaicin is able to kill prostate cancer cells by causing them to undergo apoptosis.[30][31] The studies were performed on tumors formed by human prostate cancer cell cultures grown in mouse models, and showed tumors treated with capsaicin were about one-fifth the size of the untreated tumors. There have been several clinical studies conducted in Japan and China that showed natural capsaicin directly inhibits the growth of leukemic cells.[32]

Another study carried out at the University of Nottingham suggests capsaicin is able to trigger apoptosis in human lung cancer cells as well.[33]

Capsaicin is also the key ingredient in the experimental drug Adlea, which is in Phase 2 trials as a long-acting analgesic to treat post-surgical and osteoarthritis pain for weeks to months after a single injection to the site of pain.[34] More over, it reduces pain resulted rheumatoid arthritis [35] as well as joint or muscle pain from fibromyalgia or other causes.