In many vertebrates, elevated levels of plasma testosterone (T) are important for reproduction and territorial aggression. However, many tropical birds reproduce and defend territories while plasma T–levels are basal. We studied how aggression and T–levels are regulated in male neotropical spotted antbirds, which defend territories year–round in the Panamanian rainforest. Although spotted antbirds reproduce seasonally, T–levels of individual males often remained at baseline (0.2 ng ml−1) throughout the year, even in courting males. On the other hand, T–levels were elevated (maximally to 1.57 ng ml−1) during periods of social instability at any time of the year, even when males had entirely regressed gonads. Experimental territorial intrusions (broadcast of conspecific song) confirmed these observations by showing that T–levels increased after about two hours of playback time. Our data suggest that spotted antbirds avoided the potential costs associated with constantly high plasma T–levels (e.g. increased mortality rates). Contrary to temperate zone birds, spotted antbirds had the potential to react to social challenges with an increase of plasma T year–round. These results are, to our knowledge, presently unique, but may apply to many vertebrate species that inhabit the tropics.