Effects of percentage of roughage on growth, serum urea N, NEFA, and IGF-1 concentrations and wool, carcass, and fatty acid (FA) characteristics were investigated in Rambouillet wether lambs (n = 33). Lambs were individually fed ad libitum pelleted diets for 98 d containing 40% dried distillers grains and other ingredients, with 10% (CSH10), 20% (CSH20), or 30% (CSH30) cottonseed hulls replacing an increasing amount of ground sorghum grain. Results indicated no interaction between diet and day for lamb BW, ADG, or G:F. Percentage of roughage did not affect lamb BW, even though ADG linearly increased (P = 0.005) as cottonseed hulls increased in the diet. Increasing percentage of cottonseed hulls in the diet linearly increased (P < 0.001) daily DMI, which resulted in a linear increase (P = 0.001) in degradable protein intake. All lambs had similar G:F: 0.200, 0.181, and 0.190 for lambs fed CSH10, CSH20, and CSH30 diets, respectively. Diet x day interactions were not observed (P > 0.45) for serum urea N, NEFA, or IGF-1 concentrations. Serum urea N linearly increased (P = 0.005) as percentage of cottonseed hulls increased in the diet. All lambs had similar NEFA concentrations, but serum IGF-1 linearly decreased (P = 0.001) as percentage of cottonseed hulls increased in the diet. Lambs had similar wool fiber characteristics except that average fiber curvature and SD of fiber curvature linearly increased (P = 0.03) as percentage of cottonseed hulls increased in the diet. Carcass characteristics and sensory panel traits were not affected (P > 0.19) by diet, except for body wall thickness (quadratic, P = 0.03) and a linear decrease in sustained tenderness (P = 0.02) as the percentage of cottonseed hulls increased in the diet. As cottonseed hulls increased in the diet, percentages of myristic and palmitoleic (linear, P < 0.05) and arachidic SFA (quadratic, P = 0.03) decreased and cis-9,trans-11 CLA increased (linear, P = 0.007). When sorghum grain and cottonseed hull prices are similar to those reported for this study, lamb feeders are advised to use the CSH30 diet vs. CSH10 or CSH20 diets because even though DMI was greater for lambs consuming CSH30 diet, those lambs had greater ADG and the least cost of feed x kg(-1) of BW gain.