Abstract Six inbred lines of Holstein cattle were developed and reciprocally crossed to assess the importance of heterotic effects for yield and reproductive traits. Overall both yield and reproductive performance declined with inbreeding, but effects varied with different lines. In two of the lines milk yield increased during inbreeding. Regression coefficients for each percent of inbreeding ranged from +39 to –73 kg of milk. Production for estimates of general combining abilities for the different lines ranged from 5799 to 7075 kg of milk indicating the genetic variability available for selection. Some evidence was found for specific combining ability for reproductive performance but none for yield traits. Reciprocal differences were observed only for reproductive performance involving two of the line combinations. Heterosis was present for milk fat percentage, persistency of lactation, and reproductive performance. Effects of dominant genes appeared to be of minor importance in determining yield traits, and the possibility of nicking between lines for production traits, while not excluded, was of low likelihood. While mild inbreeding sometimes may produce genetic improvement, a breeding program based on additive genetic theory offers the best opportunities for raising productive performance.