This study evaluated the effects of replacing soybean meal with rumen-protected soybean groat (PSBG) in the diets of thin-tailed sheep on growth performance, nutrient digestibility, and carcass quality. A total of 15 sheep (12 months old, 23.43 ± 1.40 kg initial body weight [BW]) were randomly assigned to three dietary treatments: a control diet (CON), 10% PSBG substitution (PSBG10), and 20% PSBG substitution (PSBG20) with five animals per group. After 30 days of acclimatisation and 90 days of feeding trial, no differences (P > 0.05) were observed in final BW, average daily gain, or feed conversion ratio. However, dry matter intake was higher (P = 0.028) in the PSBG20 group compared to others. PSBG inclusion had no effect on overall nutrient digestibility, except for a significant increase in ether extract digestibility (P < 0.001) in PSBG-fed animals. Carcass traits, organ weights, and the physical properties of longissimus dorsi and triceps brachii muscles were not influenced by dietary treatments. Sheep fed 10% or 20% PSBG had lower (P < 0.05) cholesterol levels in biceps femoris and longissimus dorsi muscles compared to the CON. In pectoralis profundus, cholesterol content was also reduced (P < 0.05) in the PSBG20 group. Conversely, the triceps brachii muscle had a higher (P < 0.05) cholesterol level in the PSBG20 group compared to other treatments. In summary, while PSBG inclusion did not improve growth performance or protein digestibility, it favourably affected ether extract digestibility and meat lipid profiles, suggesting potential benefits due to reduced cholesterol content in specific muscles. Further research should focus on elucidating the underlaying mechanisms behind these effects.