Two digestion experiments were conducted to determine the effect of various levels of potato processing residue in feedlot diets on digestion of dry matter, gross energy, crude protein and starch. In Exp. 1, 10 Hereford steers (average weight 360 kg) were randomly allotted to one of five diets in which (1) 0, (2) 15, (3) 30, (4) 45 or (5) 60% of diet dry matter was provided by potato processing residue. Potato processing residue was found to be superior to barley as an energy source for beef cattle diets. When fed at 15% of the diet dry matter, potato processing residue had a digestible energy value of 3.68 Mcal/kg, which corresponds to 121% of the digestible energy of barley. However, when the residue was fed at 30, 45, or 60% of the diet dry matter, the mean digestible energy value decreased to 3.10 Mcal/kg, or 102% of the digestible energy of barley. In Exp. 2, four steers (average weight 270 kg) were surgically fitted with permanent ruminal and abomasal T cannulas. The steers were offered one of four diets in which potato processing residue provided (1) 0, (2) 20, (3) 40 or (4) 60% of diet dry matter. Ruminal and postabomasal digestion of dry matter and starch were determined. Inclusion of potato processing residue did not affect (P > .05) the location or extent of digestion of diet dry matter and starch. Diet dry matter and starch digestion in the entire tract were 86.6 and 99.1%, respectively. The mean preabomasal and postabomasal digestions of diet dry matter and starch for all four levels of potato processing residue were 78.7, 20.3, 94.4 and 5.6%, respectively. The site and extent of potato processing residue digestion were comparable to those for barley. Potato processing residue can replace barley as an energy source for finishing beef cattle.