A steer finishing trial was conducted to study the substitution of peanut skins (PS) for soybean hulls (SH) when included at three levels (0, 7.5, or 15%) in diets containing recommended (10.5% = RP) or elevated (15.5% = HP) levels of CP. Average daily gain, DMI, and gain:feed ratios decreased linearly (P < .01) when steers were fed RP and increasing levels of PS. Average daily gain and DMI increased linearly (P < .05) when steers were fed HP and increasing levels of PS. Carcass quality grades were greater (P < .05) for steers fed the HP-15% PS diet than for steers fed either the RP-15% SH or HP-15% SH diets. Ruminal fluid ammonia concentrations were greater (P < .05) for HP diets and decreased linearly (P < .05) with increasing levels of PS at both RP and HP. Nutrient fractions of the HP diets were more (P < .05) digestible for CF, NDF, and ADF than for the RP diets. In general, the HP-7.5% SH/PS diet was more digestible than the other diets in the comparison. When SH are fed as 15% of the diet, PS can be substituted for SH up to 7.5% of the diet at RP levels and can be used to completely replace SH at HP levels.