In the western Henan agricultural area, Duhu (Dupo♂ × Hu sheep♀) hybrid lambs are the primary breed of local meat sheep, predominantly raised in large-scale indoor feeding systems, although many farmers still rely on grazing. However, limited research exists on the meat quality of Duhu lambs under both grazing and indoor feeding systems. This study examined how grazing and indoor feeding affect the nutritional quality, flavor, amino acid profile, and fatty acid composition of 7-month-old Duhu lamb meat. Grazed lamb meat exhibited significantly (p < 0.05) higher moisture, protein content, hardness, adhesiveness, springiness, rubberiness, chewiness, and resilience than indoor-fed lamb. Regarding aroma, ammonia, oxidized compounds, and inorganic sulfides were more pronounced and stable in grazed lamb meat. Flavor analysis showed stronger bitter, salty, and sweet profiles in grazed lamb meat, whereas the sour flavor was more pronounced in indoor-fed meat. Among the volatile flavor compounds, 26 organic compounds were identified in grazed lamb meat compared with 12 in indoor-fed meat, with 1 compound common. Additionally, 16 amino acids were found in both feeding systems, with amino acid levels significantly higher (p < 0.01) in indoor-fed lamb. In total, 25 fatty acids were detected in grazed lamb meat, whereas 15 were found in indoor-fed meat, with 11 showing significantly different levels (p < 0.05). Indoor-fed lamb meat exhibited a considerably higher saturated fatty acid content (p < 0.05) compared to grazed lamb meat, while the n-3 polyunsaturated fatty acid content was significantly lower (p < 0.05).