Recent research has shown that the ecology of stress has hitherto been neglected, but it is in fact an important influence on the distribution and numbers of wild vertebrates. Environmental changes have the potential to cause physiological stress that can affect population dynamics. Detailed information on the influence of environmental variables on glucocorticoid levels (a measure of stress) at the trailing edge of a species' distribution can highlight stressors that potentially threaten species and thereby help explain how environmental challenges, such as climate change, will affect the survival of these populations. Rainfall determines leaf moisture and/or nutritional content, which in turn impacts on cortisol concentrations. We show that higher faecal cortisol metabolite (FCM) levels in koala populations at the trailing arid edge of their range in southwestern Queensland are associated with lower rainfall levels (especially rainfall from the previous two months), indicating an increase in physiological stress when moisture levels are low. These results show that koalas at the semi-arid, inland edge of their geographic range, will fail to cope with increasing aridity from climate change. The results demonstrate the importance of integrating physiological assessments into ecological studies to identify stressors that have the potential to compromise the long-term survival of threatened species. This finding points to the need for research to link these stressors to demographic decline to ensure a more comprehensive understanding of species' responses to climate change.