Exploitation of heterosis in most crops is one of the methods to increase yield. Knowledge of heterosis together with combining ability analysis is frequently used to choose good combiners and promising hybrid combinations. Thus, the objectives of this study were to evaluate combining abilities and heterosis of F1 and F2 generations and association of yield and yield components. The experiments were conducted in Yezin Agricultural University during 2006-2008. Eight varieties were crossed in a diallel mating design (Method 2). The parental lines along with F1, F2 progenies and 4 checks were grown in two micro-environments in RCB design with two replications. The crosses (Co-1? India 7B), (Co-1 ? Sinyadana 3), (Co-1 ? Yethaekyaw), (Sinyadana 11 ? Co-1) and (Co-1 ? VTS-2009) had better mean yield performances and showed high heterosis values for yield. Among these, the two combinations (Co-1 ? India 7B) and (Co-1 ? Sinyadana 3) showed high SCA effects. Therefore, these two combinations could be selected to use in production of hybrids. The genotype Co-1 was identified as the best general combiner having maximum GCA effect for more than half of the observed traits. There was no difference in yield performance between the F1 and F2 generations of Co-1 ? Yathaekyaw cross. This F2 generation might be used in production of sesame to save the cost of F1 hybrid seeds. In correlation study, yield was significantly and positively correlated with days to maturity, plant height, primary branches, secondary branches and capsules per plant. Therefore, these five characters were the main yield contributing traits in sesame production.