The Nofence technology is a GPS-based virtual fencing system designed to keep sheep within predefined borders, without using physical fences. Sheep wearing a Nofence collar receive a sound signal when crossing the virtual border and a weak electric shock if continuing to walk out from the virtual enclosure. Two experiments testing the functionality of the Nofence system and a new learning protocol is described. In Experiment 1, nine ewes with their lambs were divided into groups of three and placed in an experimental enclosure with one Nofence border. During 2 days, there was a physical fence outside the border, during Day 3 the physical fence was removed and on Day 4, the border was moved to the other end of the enclosure. The sheep received between 6 and 20 shocks with an average of 10.9 ± 2.0 (mean ± SE) per ewe during all 4 days. The number of shocks decreased from 4.38 ± 0.63 on Day 3 (when the physical fence was removed) to 1.5 ± 0.71 on Day 4 (when the border was moved). The ewes spent on average 3%, 6%, 46% and 9% of their time outside the border on Days 1, 2, 3 and 4, respectively. In Experiment 2, 32 ewes, with and without lambs, were divided into groups of eight and placed in an experimental enclosure. On Day 1, the enclosure was fenced with three physical fences and one virtual border, which was then increased to two virtual borders on Day 2. To continue to Day 3, when there was supposed to be three virtual borders on the enclosure, at least 50% of the ewes in a group should have received a maximum of four shocks on Day 2. None of the groups reached this learning criterion and the experiment ended after Day 2. The sheep received 4.1 ± 0.32 shocks on Day 1 and 4.7 ± 0.28 shocks on Day 2. In total, 71% of the ewes received the maximum number of five shocks on Day 1 and 77% on Day 2. The individual ewes spent between 0% and 69.5% of Day 1 in the exclusion zone and between 0% and 64% on Day 2. In conclusion, it is too challenging to ensure an efficient learning and hence, animal welfare cannot be secured. There were technical challenges with the collars that may have affected the results. The Nofence prototype was unable to keep the sheep within the intended borders, and thus cannot replace physical fencing for sheep.