Two experiments were conducted to determine the effect of increasing dietary CaO on ruminal fermentation, diet digestibility, performance, and carcass characteristics of feedlot steers fed 60% dried distillers grains with solubles ( DDGS: ). In Exp. 1, 120 steers were allotted by weight (355 ± 7.9 kg) to 1 of 4 treatments containing 60% DDGS, 20% corn silage, 13.5 to 14.4% ground corn, 4% supplement, and 0 to 2.5% limestone on DM basis to determine the effects of CaO on performance and carcass characteristics. Treatments consisted of 0, 0.8, 1.6, or 2.4% CaO inclusion in the diet (DM basis), with CaO replacing limestone. Steers were slaughtered at a target BW of approximately 641 kg. In Exp. 2, 4 steers (initial BW = 288 ± 3 kg) were randomly allotted to the same diets in a 4 × 4 Latin square design (14-d periods) to determine the effects of CaO on ruminal pH, VFA, and nutrient digestibility. Statistical analyses were conducted using the MIXED procedure of SAS. Inclusion of CaO at 0.8, 1.6, and 2.4% increased ADG by 5.0, 3.9, and 0%, respectively, compared to 0% CaO (quadratic; P = 0.03). Intake was linearly decreased (P = 0.04) and G:F was linearly increased (P = 0.02) by CaO inclusion. Dressing percentage increased as CaO increased from 0 to 1.6% and then decreased for 2.4% CaO (quadratic; P < 0.01). In Exp. 2, steers fed 0% CaO had the greatest prefeeding ruminal pH, steers fed 0 and 0.8% CaO exhibited the most rapid postfeeding decline in ruminal pH, and steers fed 2.4% CaO exhibited a relatively stable ruminal pH throughout the 24-h period (treatment × time; P ≤ 0.01). Acetate, butyrate, and total VFA concentrations increased linearly (P ≤ 0.05) at 0, 3, 6, and 12 h postfeeding with increasing CaO. Propionate at 3 h postfeeding increased from 0 to 1.6% CaO and decreased from 1.6 to 2.4% CaO (quadratic; P = 0.10). Urine pH increased linearly (P ≤ 0.01) while urine output and urine ammonia decreased linearly (P ≤ 0.05) as CaO inclusion increased. Apparent NDF digestibility tended to increase (P = 0.07) and ADF digestibility did (P = 0.01) increase linearly with increasing concentrations of CaO. In conclusion, CaO improved ruminal pH variation, increased fiber digestibility, and decreased metabolic acid load in cattle fed 60% DDGS-based diets. Inclusion of CaO up to 1.6% was effective in improving performance of feedlot cattle.