Wool growth is derived directly from protein synthesis in the skin of sheep, and is affected by the nutritional status of the animals. The present experiment examined both protein synthesis in the skin and muscle and wool growth in Merino lambs differing in live weight, intake and dietary protein source. The experiment was a 23 factorial design: twenty-four 5-month-old lambs initially weighing 33 kg (heavy) or 25 kg (light) were fed on a hay-based diet with either lupin seed or rapeseed meal as the major protein sources to maintain live weight (M) for 56 d, or were fed at 0.6M for 28 d (period 1) followed by 28 d at 1.6M (period 2). Fractional protein synthesis rates (FSR, % per d) in the skin and the m. longissimus dorsi on days 4 and 24 of period 1 and day 4 of period 2 were measured by means of a flooding dose of l-[ring-d5]phenylalanine, and wool growth on a skin patch over period 1 was also measured. The FSR ranged from 13.2 to 20.2% per d in the skin, higher than reported for other breeds, and 1.53–3.07% per d in the muscle. Sheep on the low intake (0.6M) had significant reductions in FSR, protein content (g), protein synthesis (g/d) in the skin, and wool growth (g/d). The heavy lambs had similar FSR to the light lambs, but had a higher skin protein content and total protein synthesis per unit of skin area (100 cm2) and, therefore, grew more wool. The rapeseed-meal diet increased FSR and wool growth only in the light lambs over the short term. The protein deposited in wool over period 1 was 0.185 of the total protein synthesis in the skin, regardless of live weight, intake or diet, a result similar to other breeds. With the changes in dietary intake, protein synthesis in the skin and muscle responded differentially, with nutrient partitioning at sub-maintenance in favour of wool growth but at supra-maintenance, following a nutrient restriction, in favour of weight gain in young growing sheep.