Abstract Four diets with hydrolyzed wheat gluten (HWG) replacing graded amounts of crude protein (CP) (0, 12.5, 25, 50%) from LT fishmeal (FM) were extruded. For the diets with 0–25% replacement of FM, durable and sinking pellets were produced by adding 19–20% water in the extruder, at a constant feeding rate. The die pressure, specific mechanical energy (SME) and torque decreased with increasing HWG incorporation during extrusion of the diets with 0–25% replacement. Diametric expansion increased with increasing HWG inclusion. In uncoated pellets, sinking rate in water as well as lipid loss increased with increasing HWG. Diametric expansion increased by lipid coating. In coated pellets, water stability decreased with increasing HWG. The visco-elastic properties of the HWG prevented transport through the extruder with 19–20% water added in the barrel at 50% replacement, and water addition was reduced to 11% in order to obtain stable material flow. This diet had notably reduced die pressure, and increased SME. Diametric expansion and oil retaining capacity were low, while durability was high in uncoated pellets. Diametric expansion and water stability were reduced compared to the pellets produced with 19–20% water, while the pellets sank faster. Each diet was fed to duplicate groups of 0.4 kg rainbow trout for 56 days. The fish nearly doubled their weight, and no significant diet effects were seen on feed intake or growth. All diets resulted in feed conversion ratios (FCR) near 0.8 g dry matter intake per g gain. The apparent digestibilities (AD, %) of nitrogen, total and individual amino acids were high for all diets. AD of protein, cyst(e)in and phenylalanine significantly improved with increasing inclusion of HWG, while AD of isoleucine decreased. In conclusion, HWG had a strong effect on extrusion parameters and physical quality, and had nutritional value similar to LT fish meal when supplemented with essential amino acids. Statement of relevance The current research will help salmonid feed companies to optimally utilize a novel plant protein feed ingredient with high nutritional value and strong physio-chemical properties. This will both facilitate reduced use of fish meal, and increased use of other feed ingredients requiring increased binding. The current research also shows that HWG results in decreased SME, potentially decreasing production cost of extruded fish meal.