Territorial animals typically respond less aggressively to neighbours than to strangers. This ‘dear enemy effect’ has been explained by differing familiarity or by different threat levels posed by neighbours and strangers. In most species, both the familiarity and the threat-level hypothesis predict a stronger response to strangers than to neighbours. In contrast, the threat-level hypothesis predicts a stronger response to neighbours than strangers in species with intense competition between neighbours and with residents outnumbering strangers, as commonly found in social mammals such as the banded mongoose (Mungos mungo). The familiarity hypothesis predicts reduced aggression towards neighbours also in these species. We exposed free-living banded mongoose groups to translocated scent marks of neighbouring groups and strangers. Groups vocalised more and inspected more samples in response to olfactory cues of neighbours than to the strangers. Our results support the threat-lev el hypothesis and contradict the familiarity hypothesis. We suggest that increased aggression towards neighbours is more common in social species with intense competition between neighbours, as opposed to reduced aggression towards neighbours typical for solitary species.