Tannins are phenolic compounds that provide benefits to ruminants due to their protein-binding affinities and antioxidant properties. However, tannins may also have negative orosensorial and postingestive effects that decrease feed intake. This study explored how lambs trade off the ingestion of crude protein (CP) with the ingestion of potentially beneficial and toxic condensed and hydrolyzable tannins, and the ensuing impacts on diet digestibility, animal performance, and blood parameters. Thirty-two lambs were housed in individual pens for 8 wk and had access to 2 isoenergetic diets that varied in the concentration of CP (High-high in protein [HP] or Low-least preferred [LP]) and the presence of a mix of condensed and hydrolyzable tannins (4% DM). Animals were assigned to 4 treatment groups (N = 8 lambs/group) and received a simultaneous offer of: HP and LP (Control); HP and LP + tannins (HP - LP+); HP+ tannins and LP (HP + LP-); and both HP and LP with tannins (HP + LP+). All lambs preferred HP over LP and they avoided tannins in the diets (P < 0.001). Dry matter and CP intake were the lowest in HP + LP- (P < 0.0001), and DMD did not differ between Control and the other groups (P > 0.05), but it was greater for HP - LP + (P < 0.0001). CP digestibility was greater for groups without tannins in HP (P < 0.0001), but average daily gain (ADG) did not differ among treatments (P > 0.05). No differences between Control and HP + LP + were found in plasma antioxidant activity, total phenolic concentration, or haptoglobin concentration (P > 0.05). Intake of tannins was HP + LP+ > HP + LP- > HP - LP + (P < 0.0001), and fecal excretion of nitrogen (N) was HP + LP+ > HP - LP+ = HP + LP- > Control (P < 0.05). In addition, intake of tannins with both diets reduced blood urea nitrogen (BUN) concentration relative to Control (P < 0.05), thus suggesting a shift in the partitioning of N excretion from urine to feces. In summary, lambs prioritized the selection of HP over LP, regardless of the presence of a tannin extract in either or both diets. Nevertheless, lambs modulated their tannin consumption as a function of the specific diet where the tannin extract was added, with increasing levels of intake as tannins were present in just LP, then in just HP, and finally in both diets. Dietary tannins did not constrain ADG and resulted in a shift in the partitioning of N excretion from urine to feces. Such shifts have been found to result in reduced production of environmental pollutants such as ammonia, nitrous oxide, and nitrates.