A good transition from a liquid diet to a solid diet of concentrates and forages is important, considering the small size and lack of development of the calf’s rumen. However, the optimal amount of hay or other high-fiber ingredients in the diet of young calves is not well defined. Objective of this trial was to determine effects of feeding 0, 5, or 10% chopped hay (6.5% CP, 64.6% NDF) blended into a dry TMR with a textured, high starch starter (20.5% CP, 38.4% starch) on performance and digestion in Holstein steer calves from 2 to 4 mo of age. Forty-eight calves (initial BW = 90.7 ± 2.15 kg) were housed in group pens (4 per pen) and fed diets and water for ad libitum intake. Feed offered and refused was measured daily. Calf BW, hip width (HW) and body condition score (BCS; 1–5 scale) were measured initially and at 28 and 56 d. Fecal samples were collected from the pen floor with care not to sample bedding material and composited by pen during d 5–9, 26–30, and 47–51 to estimate digestibility using acid insoluble ash as digestibility marker. Data were analyzed as a completely randomized design with repeated measures and pen as the experimental unit. Initial measurements were similar, except BCS which decreased with increasing hay (P < 0.05). As hay increased, dry matter intake decreased linearly (P < 0.05). Dry matter intake as a % of BW changed quadratically with hay (P < 0.05), increasing from 0 to 5%, and decreasing from 5 to 10% hay. Average daily gain (1.15, 1.12, 0.95 kg/d; P < 0.05), feed efficiency (0.336, 0.319, 0.309 kg ADG/kg DMI; P < 0.05) and HW change (4.6, 4.7, 4.1; P < 0.05) decreased linearly with increasing hay intake. Overall estimates of DM, OM, NDF, ADF and CP digestibility changed quadratically with hay (P < 0.05), increasing from 0 to 5% and decreasing from 5 to 10% hay, whereas digestibility of starch, sugar, and fat decreased linearly with increasing hay (P < 0.05). Feeding 5% chopped hay supported optimal digestion and growth in calves 2 to 4 mo of age, which agrees with previous published research.