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Our study sought to investigate the impact of incorporating guava agroindustrial waste (GAW) at varying concentrations on nutrient utilization, lamb performance and economic viability. Forty non-castrated, 4-month-old Santa Inês lambs with an initial mean weight of 21.3 ± 2.18 kg were utilized in a confined setting. These lambs were allocated randomly to five treatment groups, each consisting of eight replicates, and were subjected to diets containing increasing levels of GAW (0 %, 7.5 %, 15 %, 22.5 % and 30 % based on dry matter). The feed formulation also included Tifton hay, corn, soybean and mineral salt. Throughout the trial period, parameters such as dry matter intake (DMI), nutrient digestibility and economic metrics were meticulously evaluated. Notably, the performance metrics among the different GAW treatments did not exhibit statistically significant differences (p > 0.05), with an average daily gain of 328 g d−1 observed across all the groups. However, there was a discernible positive effect on the intake of ether extract (p > 0.05). Regarding nutrient digestibility, only the crude protein digestibility demonstrated no significant variance (p > 0.001) among the treatments. Consequently, our findings suggest that GAW can be effectively integrated into sheep diets at levels of up to 30 % without compromising lamb performance. Moreover, from an economic standpoint, this incorporation proves to be the most financially viable and cost-effective option among the evaluated treatments.