The objective of this study was to evaluate the effects of feeding diets containing alfalfa ($380/ton) or grass ($140/ton) hays and corn or wheat grains on production performance and income over feed cost (IOFC) of dairy cows. Eight primiparous (587 ± 49 kg BW; 66 ± 16 DIM) and 16 multiparous (683 ± 56 kg BW; 66 ± 19 DIM) Holstein cows were assigned to 1 of 4 diets in a replicated 4 × 4 Latin square design with 21-d periods. Treatments included: 1) diet containing corn grain and alfalfa hay (CA), 2) diet containing corn grain and grass hay (CG), 3) diet containing wheat grain and alfalfa hay (WA), and 4) diet containing wheat grain and grass hay (WG). All diets were formulated using least-cost formulation while meeting energy and protein requirements for a 620-kg lactating cow producing 40 kg/d of milk (3.85% fat; 3.05% protein) and providing, ≥50% forage, ≥28% NDF, and ≤30% starch. Theoretical dietary costs (per kg DM) were $0.285, $0.283, $0.252, and $0.260 for CA, CG, WA, and WG, respectively. The statistical model included the effects of square (fixed), treatment (fixed), square by treatment interaction (fixed), period (random), and cow within square (random), and the random residual error. Orthogonal contrasts were used to test the main effects hay and grain, and their interaction. Dry matter intake (27.1 vs 24.4 kg/d; P < 0.01) and milk yield (47.5 vs 44.7 kg/d; P < 0.01) were greater for alfalfa- than for grass-based diets. While milk fat concentration was greater for grass- than for alfalfa-based diets (4.23 vs 3.89%; P < 0.01), milk fat yield was not affected by hay type (1.85 kg/d; P > 0.65). Milk yield tended to be greater for wheat- than for corn-based diets (46.9 vs. 45.3 kg/d; P < 0.06) but corn-based diets increased milk fat concentration relative to wheat-based diets (4.36 vs. 3.76%; P < 0.01). The resulting daily IOFC (per cow) were $14.27, $13.48, $13.14, and $12.53 for GC, GW, AC, and AW, respectively. In conclusion, feeding grass-based diets resulted in cheaper diets, a greater milk fat concentration, a greater milk price, and a greater IOFC than feeding alfalfa-based diets.