Challenges are there to be overcome – seen usually as problems to avoid rather than as opportunities to enjoy. However, for humans a life without challenge would be likely to be dull and boring, lacking the enthusiasm and satisfaction that come with individual development. Could this also be true for animals? This chapter looks at the positive value of engag­ing with environmental challenges for animal welfare, proposing that this value lies in an animal’s expression of agency and the enhanced functional competence that it gains through this. It explores the different facets of agency, and provides more detailed discussion of key elements such as problem solving, exploration and play, as well as discussing responses to challenge and how an animal’s welfare affected if it is prevented from performing behaviours of this kind. The final sec­tions of the chapter consider how monotonous, predictable, captive environments may lead to apathy and boredom, and prevent animals from experiencing a positive quality of life. Agency should be regarded as an integrative capacity that works across specific modules of organization and, as such, forms an important condition for an animal’s overall well-being and health.