Ten Hampshire x Western wether lambs (means weight = 30.1 kg) equipped with ruminal and abomasal cannulas were fed either low-Acremonium coenophialum (AC) Kentucky-31 (less than 1% infected) or high-AC G1-307 (greater than 95% infected) varieties of tall-fescue (TF) hay of similar nutrient composition in a completely randomized design. Lambs were housed in metabolism crates at 21 +/- 1 degrees C and fed 552 g DM/d of ground hay at 0800 and 2000. A 10-d adaptation preceded 7 d of sample collection. Levels of water and DM voluntarily consumed by the low-AC group during the adjustment period were held constant for both treatment groups throughout the collection period by intraruminal insertion of unconsumed DM and water. Fixed water intake markedly reduced voluntary water intake but it alleviated previous depressions in voluntary DM intake in lambs fed high-AC. Mean daily respiration and heart rates, rectal temperature and hematocrit were not affected (P greater than .10) by treatment. Compared with high-AC, lambs fed low-AC retained a greater (P less than .10) amount of N (1.8 vs 1.1 g/d) and a greater (P less than .10) percentage of their N intake (16.4 vs 9.9%). Abomasal total and bacterial N flow and ruminal digestion of cell wall components were not affected (P greater than .10) by treatment. Total tract digestion of DM, NDF and ADF was lower (P less than .01) for high- than for low-AC. Serum prolactin concentration was higher (P less than .10) for lambs fed low- than for those fed high-AC TF, but serum cortisol and thyroxine concentrations were not affected (P greater than .10) by treatment.(ABSTRACT TRUNCATED AT 250 WORDS)