The study hypothesized that a 24% protein starter diet supplemented with inert fat (palm fatty acids; PLFs) instead of triglyceride-rich soybean oil (SBO) would promote the growth of dairy calves. The effects of different protein contents (20 vs 24% CP) and fat sources (SBO vs PLF at 2.5% DM) on growth, digestibility, blood metabolites, rumen protozoa and urinary nitrogen in dairy calves were investigated. A total of 52 female dairy calves (mean age 3 days and BW 40.7 kg) were allocated to the following treatments in a completely randomized design: (1) 20% CP starter diet supplemented with SBO (20CP-SBO), (2) 20% CP starter diet supplemented with PLF (20CP-PLF), (3) 24% CP starter diet supplemented with SBO (24CP-SBO), and (4) 24% CP starter diet supplemented with PLF (24CP-PLF). Calves were weaned on day 53, and the study ended on day 73. The 24CP diets enhanced starter feed intake, average daily gain (ADG), withers height, hip width, organic matter (OM) digestibility, and preweaning blood glucose compared to the 20CP diets. In contrast, SBO supplementation reduced feed intake, ADG, withers height, OM and CP digestibility, and pre- and postweaning blood glucose and beta-hydroxybutyrate levels, while increasing preweaning aspartate aminotransferase, compared to PLF. SBO supplementation led to lower urinary excretion of purine derivatives and microbial protein synthesis postweaning, and a reduction in protozoa population both pre- and postweaning. Calves fed PLF had higher starter intake than those fed SBO, regardless of the diet being 20CP or 24CP. Calves fed the 24CP-PLF diet had the highest ADG, while calves fed the 20CP-SBO diet had the lowest ADG. Calves fed the 20CP-SBO diet had lower feed efficiency than calves fed the other diets during the preweaning period and throughout the experimental period. Calves fed the 24CP-PLF diet had higher hip heights at weaning and on day 73 than calves fed the other diets. Calves fed the 20CP-SBO diet had lower neutral detergent fiber digestibility than calves fed the other diets. Calves fed the 24CP-SBO diet had higher postweaning blood urea nitrogen concentration than calves fed the other diets. Feeding the 20CP-SBO diet to dairy calves decreased urinary allantoin excretion and rumen microbial protein synthesis but increased urinary nitrogen excretion during the preweaning period. Our results suggest that PLF is more suitable than SBO in calf diets, especially when calves fed 24% CP, possibly due to improved nutrient digestibility.