This study evaluated the effect of wheat straw urea treatment and Leucaena leucocephala (LL) foliage hay supplementation on intake, digestibility, nitrogen balance and growth of Ethiopian highland sheep. Thirty-six yearling male lambs were randomly allotted, in randomized complete design, to six dietary treatments:-untreated wheat straw (T1); urea treated wheat straw (T2); T2 plus 100, 200, 300 g LL in T3, T4, T5 respectively, and T1 plus 300 g LL per lamb/day (T6). The lambs were fed for three months. Urea treatment increased straw crude protein (CP) content (g kg-1 DM) (32 vs. 60) and decreased neutral detergent fiber (NDF) (807 vs. 743), acid detergent fiber (ADF) (523 vs. 504) and acid detergent lignin (ADL) (75 vs. 70). Straw intake was increased (P<0.001) with urea treatment and supplementation. Total DM intake (g/day) peaked (P<0.001) in T5 (750) compared to T6 (546.9). Lambs in T2 gained 10.7, while lambs in T1 lost 33.9 g/day. The highest average daily gain (47.2 g) was achieved in T5. Digestibility of DM, organic matter (OM) and CP was higher (P<0.001) in T2 than T1. Supplementation increased the digestibility of DM, CP and Ash significantly. Digestibility of nutrients, except CP, was higher (P<0.001) in T5 than T6. Nitrogen balances (g/day) were positive, except in T1 (-0.71 g/day) and increased (P<0.001) with supplementation. Total nitrogen excretion (g/day) was higher (P<0.001) in T2 (4.64) than T1 (2.97) and increased with supplementation. It is concluded that combined use of urea treatment and LL supplementation improves feed utilization and lambs' performance better than using them separately.