The comparative effect of reducing the protein content of formulated feed on the growth and survival of black tiger shrimp, Penaeus monodon, and on water quality was tested in outdoor tanks. Three diets, 300, 350 and 400 g kg−1 crude protein (CP), were fed to P. monodon (3.1 g animals, 25 animals per m2) in each of eight replicated outdoor 2500 L tanks in an 8‐week trial. There was no statistical difference (P > 0.05) in shrimp growth rate (1.34–1.50 g week−1), survival, or final biomass between the treatments. However, when tanks with lower survival were removed from the analysis (<60 and <80% were tested), shrimp growth rate was statistically higher (P < 0.05) in the 350 and 400 g kg−1 CP diets than in the 300 g kg−1 CP diet treatment. There were no differences in the nutritional condition of shrimp between treatments, as determined by moisture and protein content, and lipid content of the digestive gland. Using 15N‐nitrogen isotope tracers, it was determined that shrimp were consuming natural biota, although these were unlikely to have contributed substantially to their nutrition. Total nitrogen (TN) concentrations in the water column increased over the eight week experiment and were statistically different (P < 0.001) between treatments (3.60, 5.17 and 6.45 mg L−1 in the 300, 350 and 400 g kg−1 CP treatments, respectively). Concentrations of dissolved organic nitrogen (DON) were also statistically different between treatments and made up 35–40% of the TN in the water column. Concentrations of total ammoniacal nitrogen (TAN) and oxides of nitrogen, and fluorescence were not statistically different between treatments but there was a trend of higher concentrations in treatments with higher protein levels. There was no difference in sediment nutrients between treatments. This study has shown that there is scope to reduce the protein content of P. monodon diets but only by 5–10%. However, further validation of these results in commercial ponds is needed. Reducing the feed protein content may result in cost savings and also has the advantage of improving water quality and reducing nitrogen discharge.