The recent trend in the dairy industry towards elevated planes of milk feeding of young calves requires reconsideration of calf milk replacer (CMR) formulations. The fat:lactose ratio in CMR is typically lower than that of whole milk and effects of increasing fat inclusion at the expense of lactose in CMR on nutrient metabolism and gut function of rearing calves are not sufficiently understood. Therefore, the current study aimed to determine the effect of increasing replacement of lactose by fat on growth performance, nutrient digestibility and metabolism, and glucose/insulin sensitivity. A total of 40 male calves (1.7 ± 0.10 days of age, 46.7 ± 0.76 kg BW) were blocked based on arrival date and randomly assigned to one of four treatments containing differing levels of fat and lactose (18F: 18.8% and 47.6%; 22F: 22.3% and 42.8%; 26F: 26.0% and 38.6%; 30F: 30.1% and 33.8%, fat and lactose DM, respectively). Calves were individually housed for the duration of the 11 week study and received their CMR (150 g/L) twice a day (0700 and 1600 h) from a teat bucket. The CMR feeding schedule consisted of 6 L/d from d 2 to 14, 7 L/d from d 15 to 56, and then 4 L/d during gradual weaning from 56 to 63 days. Pelleted starter, chopped straw, and water were available ad libitum throughout the study. Measurements included feed intake, growth, nutrient digestibility, fecal composition, and blood parameters. A glucose tolerance test (GTT) was performed between 28 and 32 days of age. By design, metabolizable energy intake from CMR increased linearly with fat level, but this did not result in a difference in BW, ADG, or concentrate intake. Fecal composition remained unaffected by treatment except for higher fat content in 22F compared to 26F. Also, plasma non-esterified fatty acids and total bilirubin differences were limited to 22F having the highest values whereas 26F had the lowest values. Regarding the GTT, total area under the curve (AUC) for glucose was highest in 22F and 26F and lowest in 18F whereas the AUC between 30 and 60 min for glucose was highest in 26F and lowest in 18F and 22F. Overall, altering the lactose:fat ratio in CMR did not affect growth performance while having minor effects on nutrient metabolism, but future investigation should focus on physiological consequences and effects in adult life to understand biological impact of fat and lactose levels in CMR for rearing calves.