Combining ability and heterosis were studied in a 8 x 8 diallel set of wheat. Analysis of variance revealed the presence of significant variance due to gca among the parents and due to sea among the crosses for all the traits studied, except for effective tiller number for sea. Low estimates of predictability ratio indicated predominance of non-additive gene effects for grain yield, total dry matter, 100-seed weight, harvest index and days to maturity. Almost equal importance of additive and non-additive gene effects was observed for days to flower, flag leaf length, peduncle length and grains per spike, while, additive gene effects were predominant for plant height and effective tiller number, HD 2385 was identified as a good general combiner for grain yield. Significant heterosis over better parent and over standard variety was observed for all the traits, studied. The magnitude of heterosis was highest (74.4%) for grain yield over better parent and for toal dry matter (72.3%) over standard variety. The high magnitude (52.6%) of st andard heterosis was observed for grain yield.