The study examined psychosocial work-conditions and physiological reactions among thirty-six police inspectors (median age 45 years, 81% males) who participated in a reorganization. At this time, subjects were threatened by unemployment and had to reapply for their positions in a new police district. Data were collected during the reorganization and at three years follow-up, by means of questionnaires (Stress Profile) and blood samples. The blood samples were used to determine serum levels of gammaglutamyltransferase (GGT), glucose, lipids, prolactin, testosterone and cortisol. The results show a positive association betweenworry about employment and symptoms ofburnout during the reorganization. Mean scores for the Stress Profile sub-scalesworry about employment (p<.01) andwork-load (p<.05) decreased between measurements but an impairment inrelationships with management was noticed (p<.05). No significant changes were observed in terms of self-rated health complaints. Significant decreases in total cholesterol (p<.0001), LDL-cholesterol (p<.0001), LDL/HDL-ratio (p<.01), prolactin (p<.0001), as well as increases in testosterone (p<.01) and cortisol (p<.001) were observed for the whole sample. Glucose decreased with marginal significance (<.07). Controlling for age and gender, multivariate regression analyses showed that subjects who reported deteriorations insatisfaction with work manifested the most modest decreases in prolactin (p<.05). Also, the decrease in glucose was larger for subjects who experienced impairments in,satisfaction with work (p<.05), information (p<.05), task-oriented leadership, (p<.05), andrespect and dignity (p<.05). Subjects who perceived deteriorations in theethical and moral standards of the organization increased their cortisol level to a lower degree than their counterparts (p<.05). Favorable changes in employment status and psychosocial work environment seem to be related to improved physiological functioning.