This study examined the effect of ambient temperature on perirenal adipose tissue development and thermoregulation over the first month of postnatal life in lambs treated with a drug that reduces thyroid hormone synthesis (methimazole; at a dose of 50 mg day‐1 (kg body weight)‐1). Twin lambs were hand‐reared at a fixed level of nutrition in either a warm (WR; 25 degrees C) or cool (CR; 10‐15 degrees C) ambient temperature. Oxygen consumption, heart rate and colonic temperature were measured during non‐rapid eye movement sleep in different ambient temperatures (6, 15, 25 and 34–36 degrees C) at 7, 14 and 28 days of age. Plasma thyroid hormone concentrations decreased with postnatal age and were higher in CR than in WR lambs. All lambs increased plasma thyroid hormone concentrations and O2 consumption during cold exposure but this was associated with a mean increase in colonic temperature in WR lambs at 7 or 28 days. Colonic temperature increased with the onset of panting at all ages when lambs were exposed to 34–36 degrees C, a response that was greatest at 28 days in CR lambs. An increase in colonic temperature with age was observed in CR but not WR lambs. Heart rate declined with age only in the WR group. At 8 and 29 days there were no significant differences between WR and CR groups in the occurrence of shivering or in the thermogenic activity (i.e. GDP binding to mitochondria) of perirenal adipose tissue. At 29 days WR lambs possessed more adipose tissue with a higher lipid and DNA content. It is concluded that modest changes in rearing temperature can have a large influence on the control of body temperature and thyroid hormone response to methimazole treatment. CR lambs are able to maintain higher plasma thyroid hormone concentrations and exhibit improved thermoregulation compared with WR lambs without any detectable differences in brown adipose tissue function.