Resource competition and disease transmission may occur when domestic and wild ungulates live sympatricly. We investigated if the release of sheep (Ovis aries) onto alpine pasture in Switzerland affected chamois (Rupicapra rupicapra) activity budgets, local population size and spatial distribution. We also evaluated the risk of transmission of Mycoplasma conjunctivae (causing a contagious eye disease) from sheep to chamois by examining if the two species had close contact with one another. We carried out the study in an alpine valley containing two adjacent areas: one containing sheep (Fochsenflue) and one where sheep were excluded (Spitzflue). We found no difference between the activity budgets of the chamois at the two sites. At the Fochsenflue, chamois and sheep mainly used separate areas. However, after approximately 1 month, sheep started to move twice per day, into the main area of the chamois. The percentage time feeding, spatial distribution and numbers of chamois did not change in response. Sheep were responsible for all encounters in which the two species came closer than 50 m to each other. The encounters were brief, body contact never occurred, they were not concentrated at saltlicks and chamois mainly ended them. The results suggest that the presence of sheep had little effect on the chamois. However, competition between the two species could still be occurring over a longer time scale. Finally, we found that the risk of inter-specific transmission of IKC through direct body contact is likely to be low, but the risk through indirect means (flies or aerosols) remains.