Palm kernel expeller (PKE) is a feed by-product that is used by the dairy and beef industries. This study investigated the effect of partially replacing maize with PKE in a dairy concentrate on milk and ruminal fermentation parameters of Jersey cows grazing kikuyu-ryegrass pasture. Seventy-two multiparous cows were blocked according to milk yield, days in milk, and lactation number and randomly allocated within blocks to one of four treatment concentrates: PKE0, PKE10, PKE20, and PKE30, containing 0, 100, 200, and 300 g PKE/kg dry matter (DM), respectively. Eight rumen-cannulated lactating cows were used in a 4 x 4 Latin square design. All cows grazed pasture as one group, and concentrate was fed at 5.4 kg DM/cow per day. Pasture was allocated at 11.1 kg DM/cow per day. Milk yield was lower with PKE30 than PKE0 (14.3 versus15.6 kg/cow per day, respectively). Feeding PKE20 and PKE30 was associated with a higher milk fat content of 50.6 and 52.9 g/kg, respectively, than that of 46.3 and 49.3 g/kg of cows fed PKE0 and PKE10, respectively. However, feeding PKE30 compromised fibre degradability. Increased milk fat content and sustained milk yield indicated that 200 g PKE/kg DM can partially replace maize in a dairy concentrate, resulting in a possible added economical advantage, which is dependent on the milk payment system. The lack of a significant effect on milk fat yield and the negative linear relationship of milk protein to milk fat ratio, induced by PKE inclusion, may be unfavourable for certain milk payment systems.