A 12-week feeding trial was conducted to examine the replacement of fish meal with pet-grade poultry by-product meal (PBM-PG) in the spotted rose snapper Lutjanus guttatus diet. Five experimental diets were formulated to contain graded levels of PBM-PG at proportion of 250, 500, 75 or 900 g kg−1. The control diet contained sardine fish meal as the main protein source. Four groups of 15 randomly assigned L. guttatus juveniles were fed to satiation 3 times day−1. Except for the fish fed the PBM-PG90 diet, the growth performance, survival and feed utilization efficiency of the experimental fish were not significantly lower than those of the control fish. The dietary level of PBM-PG did significantly affect the haematological characteristics (P < 0.05). The dietary dry matter and protein apparent digestibility coefficients (ADCs) decreased with increasing dietary PBM-PG. High values for lipid ADCs were observed in all diets, with significant differences among the dietary treatments. The fish whole-body protein, moisture, lipid and ash contents were not affected by the inclusion of dietary PBM. These results indicate that high-quality terrestrial PBM can successfully replace more than half of the marine fish meal protein in the L. guttatus diet.