The purpose of this experiment was to investigate how chicken oil affects production performance, egg quality and gut morphology of layers. A total of 120 Lohmann Single Comb White Leghorn commercial layers (25-week-old) were randomly assigned to four treatments having three replicates each (10 layers per replicate) under a completely randomized design. Chicken oil was used in feed @ 0.0, 1.5, 3.0 and 4.5% in various treatment groups (20 weeks duration). Chicken fat obtained from broiler skin is a very good economical source of energy in the animal feed industry. Results of the present study indicated that feed intake significantly increased up to level of 3% chicken oil whereas 4.5% chicken oil group had higher body weight, egg weight and egg mass. Weekly egg production and feed conversion ratio/dozens of eggs were significantly increased in 1.5% chicken oil treatment group. Laying hens fed 1.5% chicken oil diet had better egg specific gravity and eggshell thickness. Eggshell weight, Haugh unit score, yolk weight, albumin weight and yolk color improved by addition of 4.5% chicken oil in layer diet. Adding 3% chicken oil improved albumin height, yolk height and yolk diameter. Hens raised on 4.5% chicken oil showed increased villus height in ileum while duodenum and jejunum showed lower villus height. However, 3% chicken oil increased crypt depth in duodenum and ileum. Villus height to crypt depth ratio was decreased in all parts of intestine. It was concluded that addition of chicken oil in layer diet @ 1.5% improved hen production performance, egg quality without negative effect on gut morphology.