Squirrels twitch their tails as a signaling device to indicate that they are uneasy or suspicious. A squirrel's tail is one of its primary sources for communication with other squirrels. Their tails are also used for balance and protection.
Squirrels are always on the lookout for the signal for predators or danger and if they see another squirrel's tail twitch, they become more alert. If a squirrel approaches another of the opposite sex, its tail often shivers. If it rains, snows or is generally cold, the squirrel can use its tail to keep itself warm and dry. If it is too warm, the squirrel can pump more blood to the tail in order to keep its body temperature down.