The genetic basis of seed setting was evaluated in seven clones of alfalfa selected under predominantly self-pollinating conditions. They were hand crossed in all possible combinations. Their compatibility was studied by the percentage of flowers forming pods and number of seeds per pod during crossing. The variances for GCA, SCA and reciprocal effects were significant for percentage of pod set with a narrow sense héritability of 64 %. This suggested maternal influence of clones on percent pod set, controlled primarily by additive genetic components. GCA was the only significant component for number of seeds per pod with a narrow sense heritability of 71%. There were wide differences between the clones in their relative magnitude of GCA, SCA and reciprocal effects for both traits used as compatibility indexes. Performance of the diallel crosses was judged by studying seed yield and its related characters, namely seeds per pod, dry matter per plant, frost resistance, plant vigor and plant height. Although GCA and SCA variances were significant for all characters, reciprocal differences in general were absent. The SCA values were very high as compared to GCA. Narrow sense heritability values were very low while broad sense heritability were much higher. This suggested that almost none of the variation was due to additive genetic components and all the variability is controlled by interactions of a digenic, trigenic and quadrigenic nature and heterzozygosity. Heterosis was evaluated by comparing the seed yield of single crosses with their mid-parent and high-parent, and very high values were observed. Thus selection of better genes may not be feasible and further improvement in selected clones may have to be brought about by utilization of various interactions and heterosis. An attempt was made to find combinations of characters that may be used for the selection of seed yield but none were found to be satisfactory.