The objective of this clinical trial was to evaluate the influence of prophylactic and therapeutic antibiotics on health and performance in preweaned dairy calves on a calf ranch. One hundred twenty 1-d-old calves were enrolled into 3 management systems for antibiotic use and raised until 4 wk of age. Sixty calves were not eligible to receive prophylactic or therapeutic antibiotics. Thirty calves were eligible to receive individual antibiotic treatment for disease, but no prophylactic antibiotics in milk replacer. The remaining 30 calves received milk replacer medicated with neomycin and tetracycline HCl, and could be treated with antibiotics. Health status and treatments were monitored and recorded daily. The primary study outcomes were weight gain, morbidity, and mortality. The most important factor associated with morbidity and mortality was passive immune transfer through colostrum. In-feed antibiotics delayed onset of morbidity, decreased overall morbidity, and increased weight gain. Nonantibiotic therapies for clinical disease were associated with increased mortality and morbidity compared with antibiotic treatments. The study has shown that minimizing or eliminating the use of antibiotics in the feed requires measures to ensure adequate passive transfer of immunity, but that in the face of inadequate passive transfer of immunity, animal welfare may be endangered by replacing medicated milk replacer with nonmedicated milk replacer, and therapeutic antibiotics with nonantibiotic alternatives.