The evidence that wool growth can be increased through selection without any increase in voluntary feed intake is conclusive. Selected sheep are more efficient in converting feed to wool. The increase in efficiency of conversion of feed into wool is not the result of a change in digestibility of energy or protein from the ingested feed, it is due to an increase in efficiency of use of absorbed nutrients. Experimentation however, has indicated that selection for wool growth is not without other metabolic consequences including reduced fatness, changes in protein utilisation (particularly at low feed intakes), lower reproductive performance and possibly suppressed immune function. Decreased reproductive performance appears most likely in sheep selected for a high clean fleece weight (CFW):bodyweight ratio in a variable feed supply environment. Responding to an immune challenge significantly increases the requirements for amino acids. This requirement may not be met in high CFW sheep during periods of low quality and availability of feed. These potential metabolic changes associated with selection for high CFW may be further exacerbated when sheep are also selected for low fibre diameter (FD). Such selection has also been associated with reduced carcase fat. This review addresses the physiological changes associated with selection for high CFW and low FD particularly when there is competition for scarce nutrients within the body. The aim is to provide information that can be used to improve selection indices designed to increase profitability of sheep in seasonably variable environments.