What you described is called cradle cap. Read about it below.
Cradle cap looks like: Waxy pink or orange scales on the scalp. They can be mild or can grow so thick it looks like your baby's wearing a cap. Cradle cap generally shows up in the first month or two but can pop up anytime within your baby's first two years.
What's going on: This is a form of seborrheic dermatitis, which is also responsible for dandruff in adolescents and adults. "The most common cause is a yeast that grows on everybody's skin but prefers to live in greasy areas like the scalp," says Dr. Siegfried. Babies are prone to cradle cap because mom's hormones that are still circulating through their body send oil-producing glands into overdrive.
How to help: For mild cases, just use a gentle shampoo to wash your baby's hair. You can also try massaging mineral or olive oil into the scalp and then washing it out. It's okay to next use a soft-bristled brush or your fingertips to brush out flakes, but be gentle. "The more trauma you inflict to skin, the more likely the scales are to reappear," cautions Dr. Siegfried.
For a severe case of cradle cap, your pediatrician may recommend that you use a medicated anti-dandruff shampoo.
Cradle cap may look kind of funny, but it's not dangerous. "Transient things like little red spots, bumps, and scaly areas probably happen on other organs too -- who knows? But we don't have fancy names for them because we can't see them," says Dr. Siegfried. "If your child is growing and seems comfortable and happy, you don't have to worry so much.