Our objective was to measure ruminal fermentation characteristics and site and extent of nutrient digestion in sheep limit-fed an 81.6% (DM basis) concentrate diet supplemented with increasing levels of soybean oil. Eight white-faced wether lambs (39.9 +/- 3.0 kg BW) fitted with ruminal, duodenal, and ileal cannulas were used in a replicated 4 x 4 Latin square experiment. Diets were formulated to contain 15.0% CP (DM basis) and included bromegrass hay (18.4%), cracked corn, soybean oil, corn gluten meal, urea, and limestone. Soybean oil was added to diets at 0, 3.2, 6.3, and 9.4% of dietary DM. The diet was limit-fed at 1.4% of BW. After 14 d of dietary adaptation, Cr2O3 (2.5 g) was dosed at each feeding for 7 d followed by ruminal, duodenal, ileal, and fecal sample collections for 3 d. Digestibilities of OM, starch, NDF, and N were not affected (P = 0.13 to 0.95) by increasing dietary soybean oil level. Means for true ruminal (percentage of intake), lower-tract (percentage entering the duodenum), and total-tract (percentage of intake) digestibility for each nutrient were (mean +/- SEM): OM = 50.7 +/- 4.66%, 71.6 +/- 2.58%, and 82.7 +/- 0.93%; starch = 92.0 +/- 1.94%, 96.1 +/- 0.70%, and 99.8 +/- 0.05%; NDF = 36.7 +/- 6.75%, 50.9 +/- 7.58%, and 71.7 +/- 1.93%; and N = 31.6 +/- 9.93%, 84.1 +/- 1.50%, and 81.0 +/- 1.10%, respectively. Total VFA concentration was greatest in sheep fed 6.3% soybean oil and least in sheep fed 9.4% soybean oil (cubic, P = 0.01). Duodenal flow of fatty acids from the diet and those metabolized within the rumen increased (linear, P < 0.001) with increasing dietary soybean oil level. Ileal flow of 16:0, 17:0, 18:0, 18:1trans, and 18:1cis-9 fatty acids increased (P less than or equal to 0.04) with increasing dietary soybean oil level. Apparent small intestinal disappearance of 18:0 decreased (linear, P = 0.004) as dietary soybean oil increased, and with 9.4% dietary soybean oil, nearly half the duodenal 18:0 was observed at the ileum; thus, the true energy value of the soybean oil decreased with increasing oil supplementation. We conclude that supplementation of a high-concentrate diet with increasing amounts of soybean oil in limit-fed sheep resulted in a trade off between loss of potential dietary energy from the fat and gain of important PUFA and biohydrogenation intermediates, but without a marked influence on digestibility of other important macronutrients.