Alfalfa protein is poorly utilised by ruminants due to its rapid degradation in rumen. The objective of the study was to assess the influence of spraying tannic acid (TA) on chopped alfalfa hay on in vitro rumen fermentation and nitrogen (N) retention by sheep. Alfalfa hay with and without TA was fed to sheep to determine nutrient digestibility and N balance. TA was sprayed on chopped alfalfa at three concentrations to determine its effect on in vitro fermentation of dry matter (DM) and N balance in sheep. Final TA concentrations were 0, 30, 60 and 90 g TA per kg DM. The control was sprayed with the same amount of water but without TA. In vitro DM degradation and the production of gas, ammonium-N (NH4-N) and short-chain fatty acid (SCFA) were measured. TA-sprayed alfalfa and the control were fed to sheep to determine nutrient digestibility and N retention. Addition of TA had no influence on the extent and rate of gas production but significantly decreased NH4-N concentration at 30 (P < 0.05), 60 and 90 (P < 0.0001) g/kg DM. Addition of polyethylene glycol (PEG) to TA-sprayed alfalfa increased NH4-N to a level comparable to non-TA-sprayed alfalfa. Spraying of alfalfa with TA significantly decreased (P < 0.05) isovalerate but did not affect the total and individual SCFA acid production. Tannic acid significantly (P < 0.05) reduced in vitro true degradability of DM (IVTD) after 24 h incubation at levels of 60 and 90 g TA per kg DM. Neutral-detergent fibre digestibility (dNDF) after 24 h (P < 0.01), 60 and 90 (P < 0.0001) g TA per kg DM. The effect of TA on either IVTD or dNDF was not significant (P > 0.05) after 48 h of incubation. There was a strong linear relationship between percentage increase in gas production due to PEG and protein precipitation capacity (R2 = 0.94). N digestibility was significantly reduced with all three levels of TA additions. However, the proportion of urine-N to total N output was reduced by adding 60 g (P < 0.05) and 90 g (P < 0.01) TA per kg DM. Serum metabolites and liver enzymes were not affected by TA (P > 0.05). Higher faecal N as the TA level increased indicates incomplete dissociation of tannin-protein complexes post ruminally. Factors affecting dissociation of tannin-protein complexes need further study.