Red squirrels (Sciurus vulgaris) declined in Great Britain and Ireland during the last century, due to habitat loss and the introduction of grey squirrels (Sciurus carolinensis), which competitively exclude the red squirrel and act as a reservoir for squirrelpox virus (SQPV). The disease is generally fatal to red squirrels and their ecological replacement by grey squirrels is up to 25 times faster where the virus is present. We aimed to determine: (1) the seropositivity and prevalence of SQPV DNA in the invasive and native species at a regional scale; (2) possible SQPV transmission routes; and, (3) virus degradation rates under differing environmental conditions. Grey (n = 208) and red (n = 40) squirrel blood and tissues were sampled. Enzyme-linked immunosorbent assay (ELISA) and quantitative real-time polymerase chain reaction (qPCR) techniques established seropositivity and viral DNA presence, respectively. Overall 8% of squirrels sampled (both species combined) had evidence of SQPV DNA in their tissues and 22% were in possession of antibodies. SQPV prevalence in sampled red squirrels was 2.5%. Viral loads were typically low in grey squirrels by comparison to red squirrels. There was a trend for a greater number of positive samples in spring and summer than in winter. Possible transmission routes were identified through the presence of viral DNA in faeces (red squirrels only), urine and ectoparasites (both species). Virus degradation analyses suggested that, after 30 days of exposure to six combinations of environments, there were more intact virus particles in scabs kept in warm (25°C) and dry conditions than in cooler (5 and 15°C) or wet conditions. We conclude that SQPV is present at low prevalence in invasive grey squirrel populations with a lower prevalence in native red squirrels. Virus transmission could occur through urine especially during warm dry summer conditions but, more notably, via ectoparasites, which are shared by both species.