The hypothalamic-pituitary-adrenal axis (HPAA) is highly responsive to social challenges. Because stress hormones can have negative developmental and health consequences, this presents an evolutionary paradox: Why would natural selection have favored mechanisms that elevate stress hormone levels in response to psychosocial stimuli? Here we review the hypothesis that large brains, an extended childhood and intensive family care in humans are adaptations resulting from selective forces exerted by the increasingly complex and dynamic social and cultural environment that co-evolved with these traits. Variations in the modulation of stress responses mediated by specific HPAA characteristics (e.g., baseline cortisol levels, and changes in cortisol levels in response to challenges) are viewed as phenotypically plastic, ontogenetic responses to specific environmental signals. From this perspective, we discuss relations between physiological stress responses and life history trajectories, particularly the development of social competencies. We present brief summaries of data on hormones, indicators of morbidity and social environments from our long-term, naturalistic studies in both Guatemala and Dominica. Results indicate that difficult family environments and traumatic social events are associated with temporal elevations of cortisol, suppressed reproductive functioning and elevated morbidity. The long-term effects of traumatic early experiences on cortisol profiles are complex and indicate domain-specific effects, with normal recovery from physical stressors, but some heightened response to negative-affect social challenges. We consider these results to be consistent with the hypothesis that developmental programming of the HPAA and other neuroendocrine systems associated with stress responses may facilitate cognitive targeting of salient social challenges in specific environments.