The present study was divided into two main experiments: (i) experiment 1 included the evaluation of apparent nutrient digestibility, pH and ruminal ammonia concentration, and (ii) experiment 2 investigated the nutrient intake, growth performance and meat quality of lambs fed diets containing replacement levels (0, 33, 67 and 100% in dry matter basis) of soybean meal by inactive dry yeast (IDY). experiment 1 used four rumen-fistulated entire male Santa Ines lambs distributed in a 4 × 4 Latin square. experiment 2 used 36 entire male Santa Ines lambs in a randomized block design with four treatments and nine replicates. A quadratic effect (P < 0.05) of IDY was observed on the apparent digestibility of dry matter, organic matter, crude protein, ether extract and neutral detergent fiber corrected for ash and protein. A quadratic effect of the diet and sampling time was observed (P < 0.05) on the concentration of ammonia nitrogen in the rumen. The sampling time (P < 0.05) affected the ruminal pH with the data adjusted to a quadratic model. Growth performance was not affected by IDY in the diets. The subcutaneous fat thickness decreased linearly (P < 0.05) with increased levels of IDY in the diet. The meat crude protein and ash concentration increased linearly (P < 0.05), and the intramuscular fat concentration decreased linearly (P < 0.05) with increased levels of IDY in the diet. IDY can replace up to 100% of the soybean meal in lambs diets, with the use of this by-product depending on economic factors and market availability.