Milk consumption, dry feed intake, body weight (BW) gain, occurrence of diarrhea, and selected blood metabolites were studied in female Holstein calves fed milk either through conventional or step-down (STEP) methods. In conventional method, the calves (n = 20) were fed colostrum and then milk at the rate of 10% of BW for the entire period of 45 d. In STEP method, the calves (n = 20) were given colostrum and then milk for 25 d at the rate of 20% of BW, which was reduced (between d 26 to 30) to 10% of BW for the remaining 15 d. The calves fed through conventional and STEP methods were weaned gradually by diluting milk with water between d 46 and 50. Feed intake and BW of the calves were monitored until 90 d of age. The STEP calves consumed 92.3, 19.4, and 62.4% more milk than conventionally fed calves during pre-STEP (d 1 to 30), post-STEP (d 31 to 50), and preweaning (d 1 to 50) periods, respectively. Consumption of starter and hay were greater during the pre-STEP period and lesser during the post-STEP and postweaning (d 51 to 90) periods in calves provided milk using conventional method compared with STEP-fed calves. Body weight gain, dry matter intake, and feed efficiency of calves were greater in those on the STEP method than on the conventional method. Lesser blood glucose and greater blood urea nitrogen at weaning (d 50) and postweaning (d 60) possibly indicated a better functioning rumen in calves fed milk through The STEP method than those fed conventionally. Occurrence of diarrhea was higher during wk 3 and 4 of age in calves fed milk through conventional method compared with STEP-fed calves. In conclusion, STEP milk feeding may prevent the problems of depressed solid feed intake associated with ad libitum milk feeding and of poor BW gain with conventional milk feeding in dairy calves.