A mathematical model was developed to investigate the impact of level of Teladorsagia circumcincta larval pasture contamination and anthelmintic treatment on genetic parameter estimates for performance and resistance to parasites in sheep. Currently great variability is seen for published correlations between performance and resistance, with estimates appearing to vary with production environment. The model accounted for host genotype and parasitism in a population of lambs, incorporating heritable between-lamb variation in host-parasite interactions, with genetic independence of input growth and immunological variables. An epidemiological module was linked to the host-parasite interaction module via food intake (FI) to create a grazing scenario. The model was run for a population of lambs growing from 2 mo of age, grazing on pasture initially contaminated with 0, 1,000, 3,000, or 5,000 larvae/kg DM, and given either no anthelmintic treatment or drenched at 30-d intervals. The mean population values for FI and empty BW (EBW) decreased with increasing levels of initial larval contamination (IL(0)), with non-drenched lambs having a greater reduction than drenched ones. For non-drenched lambs the maximum mean population values for worm burden (WB) and fecal egg count (FEC) increased and occurred earlier for increasing IL(0), with values being similar for all IL(0) at the end of the simulation. Drenching was predicted to suppress WB and FEC, and cause reduced pasture contamination. The heritability of EBW for non-drenched lambs was predicted to be initially high (0.55) and decreased over time with increasing IL(0), whereas drenched lambs remained high throughout. The heritability of WB and FEC for all lambs was initially low (∼0.05) and increased with time to ∼0.25, with increasing IL(0) leading to this value being reached at faster rates. The genetic correlation between EBW and FEC was initially ∼-0.3. As time progressed the correlation tended towards 0, before becoming negative by the end of the simulation for non-drenched lambs, with increasing IL(0) leading to increasingly negative correlations. For drenched lambs, the correlation remained close to 0. This study highlights the impact of IL(0) and anthelmintic treatment on genetic parameters for resistance. Along with factors affecting performance penalties due to parasitism and time of reporting, the results give plausible causes for variation in genetic parameter estimates previously reported.