Abstract We tested the hypothesis that Eurasian beavers, Castor fiber, display the dear enemy phenomenon; that is, they respond less aggressively to intrusions by their territorial neighbours than to intrusions by nonterritorial floaters (strangers). This ability could be advantageous in facilitating differential treatment of wandering strangers versus established neighbours. Territorial beavers were presented with scent from neighbouring and stranger adult males. Thirty-nine different active beaver families, 18 in 1998 and 21 in 1999, were presented with a two-way choice between two pairs of experimental scent mounds; mounds with castoreum from a neighbour and a stranger, and mounds with anal gland secretion from a neighbour and a stranger. Direct observations of the families during evenings showed that: (1) beavers sniffed both castoreum and anal gland secretion from a stranger significantly longer than from a neighbour, and (2) beavers responded aggressively (stood on the mound on their hind feet, pawing and/or overmarking) significantly longer to castoreum, but not to anal gland secretion, from a stranger than from a neighbour. When experimental scent mounds were allowed to remain overnight and the beavers' responses were measured the following morning, the beavers' responses were significantly stronger to both castoreum and anal gland secretion from a stranger than from a neighbour. These findings indicate that Eurasian beavers can use scent to discriminate between neighbours and strangers, thereby supporting existence of the dear enemy phenomenon in this species. Copyright 2002 The Association for the Study of Animal Behaviour. Published by Elsevier Science Ltd. All rights reserved.