Knowledge regarding the potential interactions between supplemental fat source and fiber level in starter diet of dairy calves is lacking. The aim of the present study was to investigate the effects of supplemental saturated fat [palm fat (PLF) containing 86% palmitic acid (C16:0)] vs. unsaturated fat [soybean oil (SBO) containing 51% linoleic acid (C18:2)] and forage level on feed intake, growth performance, ruminal fermentation, nutrient digestibility, and metabolic traits in dairy calves. Forty newborn Holstein female calves (BW = 39.7 ± 1.8 kg) were assigned to 1 of 4 treatment groups (each consisting of 10 animals) in a 2 × 2 factorial arrangement of fat source [soybean oil vs. palm fat; 3% of starter based on dry matter (DM) basis] and alfalfa hay level (0 vs. 15%, on DM basis): SBO or PLF with (AH) or without (NAH) alfalfa hay. Calves had ad-libitum access to water and starters throughout the study and a constant amount of milk was offered among experimental calves during the pre-weaning period. All calves were weaned on day 63 of age and remained in the study until day 73 of age. The results showed that the lowest and the highest starter intake and average daily gain (ADG) during pre-weaning period was observed when calves received SBO-AH and PLF-AH, respectively. Accordingly, the lowest wither and hip heights at weaning time (day 63) and final wither height (day 73) were observed in SBO-AH group across treatments. Calves received PLF-AH had the highest weaning and final BW compared to other groups. Feed efficiency tended to be higher in PLF groups compared with SBO calves. Calves fed SBO-AH had the lowest digestibility of organic matter and neutral detergent fiber and also total short chain fatty acid (FA) concentrations in rumen compared with other groups. The SBO calves had lower urinary allantoin, urinary purine derivatives, and microbial protein synthesis than PLF calves; however, urinary nitrogen increased with SBO supplementation. In summary, the supp