Intake, digestibility, nitrogen (N) balance, microbial protein synthesis, weight gain, yields of the main commercial cuts and carcass morphometric measurements were evaluated in lambs fed diets containing different levels of chitosan. Sixty Santa Inês crossbred sheep with an average body weight (BW) of 24 ± 2.2 kg were assigned to three treatments (diets containing 0, 136 or 272 mg chitosan/kg BW) in a completely randomized design. There was no effect of chitosan on dry matter (DM) intake. Ingested and retained N showed a quadratic response, with the highest values estimated at the chitosan levels of 142 and 152 mg/kg BW, respectively. Similar to N balance, microbial protein synthesis showed the same quadratic response, in which the level of 136 mg/kg BW resulted in higher synthesis when compared with the other levels. No effect of chitosan was detected on average daily gain, final weight, or carcass variables (hot carcass weight, cold carcass weight, yield of commercial cuts and morphometric measurements of the carcass). Conformation, visceral fat content and fatness of carcasses were also not altered by the use of chitosan. Chitosan improves the digestibility of DM, crude protein and neutral detergent fibre, and increases N balance and microbial protein synthesis but does not change the production performance of feedlot lambs.