Capsaicin is a natural chemical found in hot peppers and other members of the capsicum family. The highest amounts of capsaicin reside where the seeds attach to the inner membrane of the hot pepper. The amount of capsaicin in hot peppers depends on variety. Exposure to capsaicin causes a disruption to your nervous system and is highly irritating to the eyes, nose, skin and lungs. According to the National Pesticide Information Center, the Environmental Protection Agency labels capsaicin a biochemical pesticide.