The objective of this study was to evaluate the effect of inclusion of lipid residue of biodiesel originated in the processing of palm oil (Elaeis guineensis) in the diet on the digestibility of feedlot lambs. Twenty-five crossbred male castrated lambs, weighing 20±1.61 kg, were distributed in randomized blocks with five treatments and five replications. The experimental period lasted 22 days; 15 for diet adaptation, 2 for the adaptation to the indicator LIPE (lignin from Eucalyptus grandis isolated, purified and enriched, UFMG, Minas Gerais) and 5 for fecal sampling. Diets were formulated with 64% concentrate based on corn and soybean meal, 31% Massai grass (Panicum maximum cv. Massai) hay and 5% lipid supplementation from increasing levels of substitution of 0, 25, 50, 75 and 100% of palm oil for biodiesel oil from palm residue. The lambs were offered two meals a day, at 7h00 and 16h00. There was linear effect of inclusion of the residue from palm oil biodiesel on dry matter intake. There was no change in digestibility of nutrients except for ether extract. The use of biodiesel from palm oil residue up to 100% replacement for the lipid supplementation of sheep positively influences the consumption without altering the digestibility of nutrients.