Traditionally, Tibetan sheep only graze pastures without any supplementary feed. However, in recent years, feedlots are being used for fattening Tibetan sheep. The present study compared the growth rates, blood parameters, rumen fermentation, and bacterial communities in Tibetan sheep fattened by pasture grazing (PG) versus those fattened by stall feeding (SF). Twenty 18-month-old Tibetan sheep wethers (42.6 ± 2.11 kg) were divided randomly into PG (n = 10) and SF (n = 10) groups. The PG sheep grazed the grasslands without any supplementary feed, while the SF sheep were offered a commercial total mixed ration (TMR) at a crude protein content of 16.2% DM and an ME of 10.59 MJ/kg. The sheep were on their treatments for 70 days, which included 10 days for adaptation and 60 days for measurements. The average daily gain, white blood cell and lymphocyte counts were greater (p < 0.05), while the platelet count was lower (p < 0.05) in the SF group than in the PG group. The serum glutathione peroxidase activity, and concentrations of total proteins and albumin were greater (p < 0.05), while glucose was lower (p < 0.01) in the PG group compared to the SF group. The concentrations of ruminal ammonia–N and total volatile fatty acids (VFAs) were greater (p < 0.05), while the pH was lower (p < 0.05) in the SF group compared to the PG group. The molar proportion of acetate and the ratio of acetate to propionate were greater (p < 0.01) in the PG sheep than in the SF sheep, but the molar proportion of propionate and iso-VFAs did not differ (p > 0.05) between the groups. Based on the PCoA, the ruminal bacterial communities were distinct between groups, and the alpha diversity was greater (p < 0.001) in the PG sheep than in the SF sheep. The dominant phyla of the rumen bacteria were Firmicutes and Bacteroidetes, while the Firmicutes to Bacteroidetes ratio was greater (p < 0.001) in the SF group than in the PG group. At the genus level, the relative abundance of Ruminococcus was greater (p < 0.05) in the SF group, while the abundances of Prevotella, the Rikenellaceae_RC9_gut_group, Butyrivibrio, and unclassified_f_Lachnospiraceae were greater (p < 0.05) in the PG group. It was concluded that the Tibetan sheep adopted a short-term intensive fattening strategy when stall fed which altered the rumen bacterial community and blood parameters, enhanced rumen fermentation, and, ultimately, improved their average daily gain.