Context Ruminant livestock industries are seeking to improve efficiency of feed use and reduce greenhouse gas emissions. Aims The research aimed to measure variation in feed intake and residual feed intake (RFI) in growing lambs and examine the inter-relationships of related traits and diet effects. Methods In Phase 1, 6-month-old Merino wethers (n = 113) were fed a base diet ad libitum for 60 days to measure dry matter intake (DMI), liveweight (LWT) and average daily gain (ADG). Whilst being fed the same base diet, measures of body composition (using computer tomography scanning) and methane emissions were collected. For Phase 2, lambs selected for low or high RFI in Phase 1 were randomly assigned to either a low or high diet and fed ad libitum for 30 days. They were assessed for intake, growth, body composition and CH4 emissions. Key results In Phase 1 there was significant variation in DMI, which was explained by these traits in order of significance (R2 additive): LWT (R2 = 63.9%), ADG (R2 = 70.4%) and fat gain (R2 = 75.7%). In Phase 2, high RFI lambs had higher metabolisable energy intake (MEI; P < 0.05) compared to low RFI lambs. In lambs fed the high diet, intake (DMI and MEI P < 0.001), LWT (P < 0.05), ADG (P < 0.001), fat and lean gain (P < 0.001) were higher than in lambs fed the low diet. Daily methane emissions were highest (P < 0.05) in high RFI lambs fed the high diet. There were no significant effects of RFI or diet on methane yield (MY; g methane/kg DM). Differences in RFI or RFI adjusted for fat gain did not persist to the end of the 30 day feeding period in Phase 2. Conclusions Lambs with low RFI had lower MEI for the same liveweight as well as lower fat and lean gain in the empty bodyweight. They also had lower daily methane emissions compared to those that had high RFI and ate more. Implications The opportunity to select sheep at a young age with lower RFI and lower MEI is of significant production and environmental importance.