The Shetland sheepdog is lively, intelligent, playful, trainable, and willing to please and obey. They are loving, loyal, and affectionate with their family, but are naturally aloof with strangers; for this reason Shelties must be socialized. The Shetland Sheepdog Standard from the AKC allows them to be reserved to strangers, but they should not show fear. Shelties do well with children if they are reared with them from an early age; however, their small size makes it easy for a child to accidentally injure them, so supervision is necessary.

Shelties are vocal dogs, and are very alert to outside stimuli. The average Sheltie is an excellent watch dog.