This study evaluated the effects of Gymnopodium floribundum Rolfe on feed intake, nitrogen metabolism, fermentation, and the rumen microbiome of lambs. After a 14 day adaptation period, eight male lambs were assigned to two groups and fed their respective diets for 22 days. The control diet (CD, n = 4) consisted of grass and concentrate (55:45), whereas the experimental diet (ED, n = 4) of grass, concentrate, and G. floribundum (25:45:30). Ruminal fluid was collected during two sampling periods. Relative to the CD group, the ED group had higher dietary crude protein intake (P = 0.030), 1.68-fold lower nitrogen utilisation (P = 0.030), and 2.26-fold greater faecal nitrogen excretion (P = 0.030). Redundancy analysis (P = 0.031) identified propionate and butyrate as the volatile fatty acids most strongly associated with the dietary treatment, whereas nitrogen retention and dry matter intake were the variables contributing most to the observed variation. Diet explained 11% of the total variation (R² = 0.11) and was associated with changes in bacterial taxa involved in structural carbohydrate degradation and volatile fatty acid metabolism. The relative abundance of Saccharofermentans, Lachnospiraceae_ND3007_group, and UCG-004 decreased in ED lambs, together with reduced activity of the L-arginine degradation II (P = 0.010) and L-methionine salvage cycle III (P = 0.007) pathways. These changes may be related to the presence of condensed tannins and other bioactive compounds. Overall, G. floribundum altered the rumen microbiota, nitrogen utilisation, volatile fatty acid metabolism, and predicted bacterial metabolic functions. These findings suggest that dietary inclusion of G. floribundum may shift bacterial metabolism towards alternative pathways involved in butyrate production.