Laboratory mice (Mus musculus) are typically housed in simple cages consisting of one open space. These standard cages may thwart mouse ability to segregate resting areas from areas where they eliminate, a behaviour that is prevalent across the animal kingdom. No scientific work has directly tested whether mice engage in such segregation behaviour, or whether the ability to do so may have welfare consequences. Here we show that mice, whether housed in standard cages or a complex housing system consisting of three interconnected standard cages, kept nesting and elimination sites highly segregated, with nest and urine co-occurring in the same location only 2% of the time. However, mice in the complex system established these clean and dirty sites in separate cages instead of separate locations within one cage, and carried bedding materials (cellulose pellets) from their nesting cages to their latrine cage. Moreover, mice in the complex system displayed more behaviours associated with positive welfare and were less disturbed by weekly husbandry procedures. We conclude that mice find waste products aversive, and that housing mice in a way that facilitates spatial segregation provides a simple way of allowing the expression of natural behaviours and improving welfare.