The objective of the present study was to assess the predictive ability of subsets of single nucleotide polymorphism (SNP) markers for development of low-cost, low-density genotyping assays in dairy cattle. Dense SNP genotypes of 4,703 Holstein bulls were provided by the USDA Agricultural Research Service. A subset of 3,305 bulls born from 1952 to 1998 was used to fit various models (training set), and a subset of 1,398 bulls born from 1999 to 2002 was used to evaluate their predictive ability (testing set). After editing, data included genotypes for 32,518 SNP and August 2003 and April 2008 predicted transmitting abilities (PTA) for lifetime net merit (LNM$), the latter resulting from progeny testing. The Bayesian least absolute shrinkage and selection operator method was used to regress August 2003 PTA on marker covariates in the training set to arrive at estimates of marker effects and direct genomic PTA. The coefficient of determination (R(2)) from regressing the April 2008 progeny test PTA of bulls in the testing set on their August 2003 direct genomic PTA was 0.375. Subsets of 300, 500, 750, 1,000, 1,250, 1,500, and 2,000 SNP were created by choosing equally spaced and highly ranked SNP, with the latter based on the absolute value of their estimated effects obtained from the training set. The SNP effects were re-estimated from the training set for each subset of SNP, and the 2008 progeny test PTA of bulls in the testing set were regressed on corresponding direct genomic PTA. The R(2) values for subsets of 300, 500, 750, 1,000, 1,250, 1,500, and 2,000 SNP with largest effects (evenly spaced SNP) were 0.184 (0.064), 0.236 (0.111), 0.269 (0.190), 0.289 (0.179), 0.307 (0.228), 0.313 (0.268), and 0.322 (0.291), respectively. These results indicate that a low-density assay comprising selected SNP could be a cost-effective alternative for selection decisions and that significant gains in predictive ability may be achieved by increasing the number of SNP allocated to such an assay from 300 or fewer to 1,000 or more.