This study was conducted to explore the antioxidant potential and functional value of guava (Psidium guajava L.) powder in muscle foods. Guava powder was used as a source of antioxidant dietary fibre in sheep meat nuggets at two different levels i.e., 0.5% (Treatment I) and 1.0% (Treatment II) and its effect was evaluated against control. Guava powder is rich in dietary fibre (43.21%), phenolics (44.04 mg GAE/g) and possesses good radical scavenging activity as well as reducing power. Incorporation of guava powder resulted in significant decrease (p<0.05) in pH of emulsion and nuggets, emulsion stability, cooking yield and moisture content of nuggets while ash and moisture content of emulsion were increased. Total phenolics, total dietary fibre (TDF) and ash content significantly increased (p<0.05) in nuggets with added guava powder. Product redness value was significantly improved (p<0.05) due to guava powder. Textural properties did not differ significantly except, springiness and shear force values. Guava powder was found to retard lipid peroxidation of cooked sheep meat nuggets as measured by TBARS number during refrigerated storage. Guava powder did not affect sensory characteristics of the products and can be used as source of antioxidant dietary fibre in meat foods.