The objective of this experiment was to determine the effects of replacing soybean hull (SBH) pellets with grass hay (GH) on growth, intake, total-tract digestibility, and rumen microbial nitrogen production of weaned dairy calves from 8 to 16 wk of age. Holstein calves (n = 16) were randomly assigned to 1 of 4 rations containing, on a dry matter (DM) basis, 76% grower with the remaining 24% being made up of different amounts of SBH pellets and GH [0% GH, 24% SBH (0GH); 8% GH, 16% SBH (8GH); 16% GH, 8% SBH (16GH); and 24% GH, 0% SBH (24GH)]. Calves were weaned at 6 wk, housed individually, and studied from 8 to 16 wk of age. From 8 to 9 wk of age calves were offered a ration consisting of 50% of texturized starter (20% CP and 35% starch), which was offered from 3 d of age, and 50% of their assigned ration. From 9 wk until the end of the study, calves were offered 100% of their assigned ration. Intake and body weight were measured weekly, and frame measurements were taken at the beginning and end of the study. Animal behavior observations were recorded every 5 min over a 24-h period at 10 and 14 wk of age. Total fecal and urine collection was conducted for 4 d consecutively at 11 and 15 wk of age. Feed and feces were evaluated for DM, N, neutral detergent fiber, acid detergent fiber, and starch to determine total-tract digestibility. Feces were evaluated for geometric mean particle length (Xgm) and particle size distribution. Urine was evaluated for N, creatinine, urea, and total purine derivatives to estimate microbial N yield. Calves offered 0GH and 8GH had a 20% increase in intake, average daily gain (1.23, 1.27, 0.89, and 0.71 kg/d for 0GH, 8GH, 16GH, and 24GH, respectively), and feed efficiency compared with 16GH and 24GH. Calves offered 8GH had the greatest levels of neutral detergent fiber and acid detergent fiber digestibility, as well as the greatest estimated microbial N yields. Inclusion of forage increased rumination time (2.75, 6.89, 7.18, and 8.16 h/d for 0GH, 8GH, 16GH, and 24GH, respectively) and decreased fecal Xgm by ~35% compared with calves offered 0GH. In the current study, increasing the replacement of SBH with GH beyond 8% was detrimental to weaned calf performance. These results indicate that when diets containing 8% GH and 16% SBH were fed to recently weaned calves, rumen functionality and feed efficiency were optimized compared with the other GH-SBH combinations.