Abstract: The effect of stabling for the first time on the behaviour and welfare of young and naïve horses has not yet been studied in detail. In this study we examined the effect of two typical housing systems on their subsequent behavioural and physiological responses upon first time stabling. Thirty-six 2-year-old Dutch warmbloods, 18 geldings and 18 mares were included in the study. Half of the horses were stabled in individual stables (10.5m2) and the other half in pair housing (48m2 for two horses). The study lasted 12 weeks. At the end of the study the physiological and temperamental responses of the horses on the different treatments was tested using a CRF challenge test (to test the HPA-axis function) and a Novel Object test (to test temperamental differences) respectively. Especially in the first week after stabling pair housed horses spent more time eating whereas individually housed horses spent more time either standing vigilant or sleeping. Stress-related behaviours like neighing, pawing, nibbling and snorting were all displayed significantly more frequently in the individually housed horses (P<0.01). At the end of the study 67% of the individually housed horses was seen performing one or more stereotypies (P<0.01). The cortisol response and ACTH response on the CRF challenge test were lower for horses in the individually housed boxes. It is suggested that this depression in socially isolated animals is caused by a desensitisation of the HPA axis in response to stress-induced elevations in ACTH and cortisol. In general there was no effect of the treatment on the reactivity of the horses during the Novel Object test. However, there were significant relations between the responses of horses in the Novel Object test and in the stable environment. It is concluded that sudden isolated stabling is stressful to young and naïve horses, resulting in a high prevalence of stereotypies and abnormal behaviours. This study also provided some support for the notion that social stress in horses may be associated with a blunted adrenocortical response to CRF challenge. The finding that responses of horses to a behavioural test are correlated with home environment behaviours suggests that individual horses exhibit consistent behavioural traits across different contexts, and opens the possibility of using behavioural tests in horses to predict more general underlying behavioural characteristics.