1. Invasive alien species can cause extinction of native species through processes including predation, interspecific competition for resources, or disease-mediated competition. Increases in stress hormones in vertebrates may be associated with these processes and contribute to the decline in survival or reproduction of the native species. 2. Eurasian red squirrels (Sciurus vulgaris) have gone extinct across much of the British Isles and parts of Northern Italy following the introduction of North American invasive grey squirrels (Sciurus carolinensis). We extracted glucocorticoid metabolites from faecal samples to measure whether the presence of the invasive species causes an increase in physiological stress in individuals of the native species. 3. We show that native red squirrels in seven sites where they co-occurred with invasive grey squirrels had glucocorticoid concentrations that were three times higher than those in five sites without the invasive species. Moreover, in a longitudinal study, stress hormones in native red squirrels increased after colonisation by grey squirrels. When we experimentally reduced the abundance of the invasive grey squirrels, the concentration of faecal glucocorticoid metabolites in co-occurring red squirrels decreased significantly between pre- and post-removal periods. 4. Hence, we found that the invasive species acts as a stressor which significantly increases the concentrations of glucocorticoids in the native species. 5. Given that sustained elevations in glucocorticoids could reduce body growth and reproductive rate, our results are consistent with previous studies where the co-occurrence of the invasive grey squirrel was associated with smaller size and lower reproductive output in red squirrels.