This study aimed to quantify production loss due to larval challenge in sheep administered a controlled release albendazole capsule (CRC) and thus determine the suitability of CRC treated sheep as a proxy for worm-free sheep in grazing experiments.The experiment used an incomplete 2×3 latin square design with 81 Merino wethers. Sheep were either infected (INF) with mixed oral infection of albendazole-susceptible Haemonchus contortus, Trichostrongylus colubriformis, and Teladorsagia circumcincta (initial bolus then thrice weekly maintenance) or remained uninfected (UINF). Worm control treatments were with a CRC (CRCT), threshold treatment with a short-acting anthelmintic when worm egg count (WEC) exceeded 1500epg (TT) or untreated (UT). The experiment was conducted in two 63-day periods (separated by a 14 day washout period) with infection treatments swapped between periods. A subset of animals was killed at the end of each period for worm counts and tissue sampling.Faecal worm egg count in UINF-UT reached 10,204 and 6078epg at day 63 in periods 1 and 2, respectively, and remained 0 throughout in the CRT treatments. There was no difference in live weight gain or wool growth of INF-CRCT sheep (67 and 70g/d) relative to UINF-CRCT (67 and 76g/d). Live weight gain was significantly lower in INF-UT (27g/d) and INF-TT (55g/d) than UINF-UT (88g/d) or UINF-TT (81g/d) treatments. During the first infection period, greasy fleece weight growth was significantly lower in INF-UT (6.33g/d) and INF-TT (6.37g/d) than UINF-UT (7.80g/d) or UINF-TT (7.32g/d) treatments. The effects of infection on production persisted in INF-UT, but not INF-TT sheep for several weeks after termination of infection. Eosinophil counts were elevated in all infected groups and the antibody response to T. colubriformis was greater in INF-CRCT and INF-TT groups compared to uninfected sheep.Together, these results indicate that larval challenge in sheep with a CRC is mildly immunogenic but is not associated with production loss. The results also showed that the CRC itself reduced live weight gain and that anthelmintic treatment at a WEC threshold of 1500epg reduces production loss during infections and prevents persistence of adverse effects following infection.