An experiment was conducted to investigate the effects of graded replacement of soybean meal (SBM) by Peanut meal (PNM) on performance, egg quality, egg fatty acid composition and cholesterol content in Rugao laying hens (a lacal breed). One hundred sixty 28-w-old laying hens were randomly assigned to 4 groups. Each group of 40 birds had 4 replicate subgroups of 10 laying hens each. All birds were acclimated to the basal diet for 1 wk. Experimental diets contained 0% (Control), 5.3%, 10.6% and 15.9% PNM (ME, 10.9 MJ/kg; CP, 48.5%; Ca, 0.27%; P, 0.56%) replacing SBM. The PNM diets were supplemented with Lys, Trp, Met and Thr to ensure the same amounts across the diets. Food and water were offered ad libitum for 6 weeks. Results showed no significant difference in the performance and egg quality of laying hens between treatment groups (P > 0.05). The concentrations of saturated FA (SFA), monounsaturated FA (MUFA), and polyunsaturated FA (PUPA) in yolks did not change with increasing PNM level in the diet, except the percentage of C22:6 was lower in yolks of 15.9% PNM group (P < 0.05). However, after 42 d of feeding, the egg yolk cholesterol concentrations in 5.3% and 10.6% PNM groups were significantly lower than that in the control group (P < 0.05). Thus, it could be feasible to use PNM in laying hen diet as an available ingredient replacing SBM, without affecting performance, egg quality, and fatty acid content while reducing the production cost.