In this study, the hypothesis that individual recognition is used as a cue to reduce the cost of contesting resources in rainbow trout Oncorhynchus mykiss, was addressed. The predictions were that the second contest between familiar individuals should be settled with less aggression, and lower probability of status reversal, than a contest between strangers. To test these predictions, similar-sized juvenile rainbow trout were subjected to two dyadic dominance contests in one of four treatment groups: in half of the pairs, the initially subordinate and dominant individuals were staged against an unfamiliar opponent (of opposite rank to their own) in a second contest, while in the other the initial pair was reunited for the second contest. Further, in half of the pairs, contestants were separated for 3 d between contests, while in the other the second contest was staged immediately after the first. Levels of aggression in contests between familiar individuals were lower than in contests between strangers, which supports the hypothesis that individual recognition reduces aggression. Dominance status was reversed in 31% of the 62 tested pairs. Although the probability of status reversal was not significantly affected by individual recognition, the degree of change in competitive success appeared to be lower in familiar pairs. Separation interacted with familiarity so that the effect of individual recognition generally was less pronounced when pairs were separated between contests, suggesting that the ability to remember opponents is time/limited. In natural streams, salmonids may use individual recognition to reduce the cost of contesting resources within groups, to reduce aggression between territory neighbours and to distinguish ‘cheaters’ from honest signallers.