The current study was carried out to examine the effect of cottonseed processing and chitosan supplementation on lamb performance, digestibility and nitrogen digestion. Eighty uncastrated Santa Inês lambs (23 ± 2.2 kg average weight, 4 months old) were distributed in a completely randomized design in a 2 × 2 factorial arrangement that consisted of two cottonseed processing forms (whole or ground) and two chitosan levels (0 or 136 mg/kg live weight). Higher dry matter and organic matter apparent digestibility coefficient (ADC) was achieved with the diets containing the whole cottonseed. Ether extract ADC was higher in the animals fed the chitosan-containing diet. There was an interaction effect on the ADC of neutral detergent fibre corrected for ash and protein, which increased with chitosan inclusion associated with the whole cottonseed. The lambs that received the treatment containing the whole cottonseed showed higher microbial protein synthesis. Chitosan addition increased nitrogen retention. The animals fed chitosan-containing diets showed higher microbial protein synthesis. There was an interaction effect on microbial protein synthesis. Whole cottonseed associated with chitosan in lamb diets increases ether extract ADC and microbial protein synthesis.