The objective of this research was to evaluate if the decline in gain-to-feed ratio (G:F) during finishing in beef cattle could be due to a reduction in nutrient digestion, short chain fatty acid absorption, or post-absorptive nutrient utilization, and those responses were influenced by the dietary energy source or timing of provision. A high-lipid byproduct pellet (HLP) was used as a partial replacement for barley grain in a high concentrate finishing diet to partially replace starch with lipid as the energy source. Yearling steers were used for performance evaluations and ruminally cannulated Hereford crossbred heifers were used for nutrient metabolism studies. The dry matter (DM), organic matter (OM), crude protein (CP) and neutral detergent fibre (NDF) digestibility of HLP diets were lower than the barley-based control diet (CON). Utilizing a phase-feeding strategy and partially replacing barley grain and canola meal with a high-fibre high-lipid byproduct pellet in the latter part of the finishing period may improve carcass yield grade without affecting average daily gain and G:F. With advancing days on feed, diet DM digestibility (P = 0.02) and insulin resistance (P = 0.04) increase without changes in ruminal pH and plasma metabolite clearance rates. A marginal increase in forage inclusion with the HLP diet increased ADG (P = 0.04). Increasing dietary lipid supply up to 6% of DM using HLP did not affect the digesta flow and rumen fermentation parameters, therefore, increased lipid content is not associated with reduced feed efficiency of the HLP diet. In conclusion, decreasing feed efficiency in the later stages of finishing in beef cattle is most likely due to changes in the post absorptive nutrient metabolism, and these changes are not influenced by the dietary energy source. The small particle size of feed ingredients within the byproduct pellet may be the factor associated with decreased feed efficiency of HLP pellet rather than lipid content. Advisors/Committee Members: Penner, Greg, Buchanan, Fiona, McKinnon, John, Hendrick, Steve, Burciaga-Robles, Luis.