Compressed baled alfalfa hay was fed to cows, and the effects on productivity, chewing activities, and digestion were measured using a replicated 4 x 4 Latin square design. Cows received second-cutting alfalfa hay (20% CP; 40% NDF) from either compressed or standard small rectangular bales at two forage to concentrate ratios (35:65 and 65:35, DM basis). Compressed hay did not affect milk yield, although milk fat content was higher (2.90 vs. 2.68%). Higher concentrate diets increased milk yield (32.2 vs. 28.3 kg/d), lowered milk fat (2.66 vs. 2.91%), and increased milk protein (3.16 vs. 2.99%) and lactose (5.06 vs. 4.99%) with no interaction between concentrate proportion and hay type. Cows fed compressed bales spent less time eating per kilogram of DM and NDF consumed than cows fed standard bales, but rumination time was unaffected by forage processing. For cows fed both types of hay, digestibilities of DM, ADF, and NDF were similar; ruminal liquid outflow rates also were similar, but rate of particulate passage from the reticulo-rumen was greater for cows receiving compressed hay. Compressing alfalfa hay did not adversely affect forage quality but increased the ease of shipping and handling and minimized storage space requirements. This process may be beneficial when higher milk fat content is desirable or when cows have limited time to consume forage.