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The objective of this study was to produce slow-release urea (SRU) coated with low-trans vegetable fat (LTVF) and compare it to uncoated urea (U) in the diet of lambs. The first experiment evaluated LTVF-coated U produced in three different ratios (U: LTVF), 30:70 (SRU 30), 40:60 (SRU 40), and 50:50 (SRU 50). SRU 40 had higher (P < 0.05) coating yield (85.5 %) and efficiency (98 %) in comparison to SRU 30 (82.9 and 96 %) and SRU 50 (83.7 and 96.6 %). SRU 40 maintained better thermal stability for retention and slower release of urea (P < 0.05). A second experiment tested SRU 40 in 32 intact male Santa Inês lambs (average age: 6 months; average body weight: 17.9 ± 2.01 kg). The lambs were allocated in four treatments: one control diet with 0.5 % U (U 0.5 %) and three levels of SRU 40 [1.25 % (SRU 1.25); 2.0 % (SRU 2); 3.0 % (SRU 3); dry matter (DM) basis] in a randomized block design to evaluate performance and ingestive behavior. A third experiment evaluated apparent digestibility, nitrogen (N) metabolism, rumen, and blood parameters of 24 intact Santa Inês lambs (average age: 6 months; average body weight: 16 ± 2.2 kg) in a randomized block design with six replications. Including SRU linearly increased ether extract (EE), and non-fiber carbohydrates intake (P < 0.05) but did not change DM, organic matter, crude protein (CP), and neutral detergent fiber assayed with heat stable amylase and expressed excluding residual ash (a NDFom), intake and performance of the lambs (P >0.05). Lambs tended to spend less time ruminating (P = 0.052) and more time eating (P = 0.078) when SRU was included in the diet. The inclusion of SRU in the diet of lambs tended to linearly increase the apparent total tract digestibility of CP (P = 0.078). There was no effect of SRU on N-intake, however, including SRU linearly reduced N-urinary excretion and linearly increased N-retention (P < 0.05). Feeding SRU 1.25 % resulted in higher N-retained and lower N-urinary and N-fecal than feeding U 0.5 %. Blood urea nitrogen (BUN) and rumen pH decreased linearly with the inclusion of SRU, while NH 3 -N concentration increased linearly (P < 0.05). Lambs fed SRU 1.25 % presented higher BUN and lower NH 3 -N compared to lambs fed U 0.5 % (P < 0.05). N-retained, microbial nitrogen and protein supply linearly increased (P < 0.05) due to the inclusion of SRU in the lambs' diet. Lambs fed U 0.5 % presented the highest (P < 0.05) BUN concentrations at all times after feeding. There was a linear decrease of BUN in lambs fed SRU at 0, 4, and 6-h post-feeding (P < 0.05). LTVF was efficient in coating urea, especially the formulation with 40 % urea and 60 % vegetable fat (SRU 40). It is recommended the inclusion of SRU 40 in the diet of lambs up to 3 % (total DM basis) as it improves the use of N in the rumen, reducing N-excretion and increasing N-retention, without affecting the performance of the lambs. • Slow-releasing urea (SRU) was encapsulated by low- trans vegetal fat (LTVF). • SRU with 40 % urea and 60 % LTVF (SRU 40) showed higher microencapsulation efficiency. • The inclusion of SRU linearly increased EE, NFC and TDN intake of the lambs. • SRU 40 at 3 % DM reduces N-urinary excretion and BUN, and increases N-retention in lambs. • SRU 40 protected with LTVF improves the digestibility and N ruminal use by lambs. [ABSTRACT FROM AUTHOR]