Horses are often stabled in individual boxes, a method that does not meet their natural needs and may cause psychical and musculoskeletal diseases. This problem is particularly evident in Iceland, where horses often spend the long winter periods in cramped boxes. The aim of this study was to analyze the suitability of a group housing system in Iceland, but the results are also applicable to horses of other regions. Eight Icelandic horses were observed in an active stable system, and their behavior and time budget were recorded. Movement and lying behavior were studied with ALT (Activity, Lying, Temperature detection) pedometers. The effect of an automatic concentrate feeding station (CFS) on the horses' behavior was examined. In the first period of investigation, the horses were fed concentrates manually, and in the second period, they were fed with the CFS. Additional behavioral observations and a determination of social hierarchy occurred directly or by video surveillance. The physical condition of the horses was recorded by body weight (BW) measurement and body condition scoring (BCS). The results showed a significant increase between the first and second trial periods in both the activity (P < 0.001) and the lying time (P = 0.003) of the horses with use of the CFS. However, there was no significant change in BW during the first period without the CFS (P = 0.884) or during the second period with the CFS (P = 0.540). The BCS of the horses was constant at a very good level during both trial periods, and the horses showed a low level of aggression, a firm social hierarchy and behavioral synchronization. This study concludes that group housing according to the active stable principle is a welfare-friendly option for keeping horses and is a suitable alternative to conventional individual boxes.