Effect of the Bt - or conventional cottonseed meal was assessed as well as the performance, fermentation, ciliate protozoa population and microbial enzyme of lambs. Three feed mixture (FM, forage: concentrate ration of 35: 65) contained groundnut oilmeal (GNM), insect protected Btcottonseed meal ( Bt -CM) or conventional whole cottonseed (C-CM) as protein source, were fed for 123 days to the control, C-CM and Bt -CM group of lambs, respectively. Whole seed meal Bt - and C-CM had similar nutrient composition. The Ca was higher while Zn content was lower in C-CM. Both CM had similar metabolizable energy (MJ/kg DM). Lambs of three groups had similar daily gain, DM intake and nutrient digestibility. Rumen fluid pH and TVFA were similar, while ammonia-N (mg/l) was higher (p<0.001) in control lambs. Cottonseed feeding eliminated (p<0.001) rumen protozoa; protozoa were 101.1, 59.0 and 39.6 ×104/ ml in rumen fluid respectively in control, C-CM and Bt -CM diet fed lambs. Rumen enzymes activities of xyalanase, β-glucosidase and β-xylosidase were similar, while Bt -CM feeding reduced (p=0.010) carboxymethyl cellulase (CMCase) activity by 47% and increased proteases activity by 22%. The study concludes that inclusion of Bt-CM produced pronounced defaunation with reduced rumen ammonia concentrations, which improved daily gain. Therefore, Bt -CM can be incorporated at 180 g/kg in lamb diet. Keywords: Cottonseed, genetically modified feed, performance, fermentation, rumen enzymes African Journal of Biotechnology , Vol. 13(3), pp. 509-522, 15 January, 2014