This study was conducted to determine the combining ability and heritability of rice grain yield, its components and some grain quality traits such as amylose content (AC), gelatinization temperature (GT), gel consistency (GC) and head rice recovery (HRR). The study was commenced by crossing the selected rice varieties based on a full diallel mating design. The F1 was harvested at the end of the season. In the following season, the crossed, reciprocal and parental lines were planted in randomly complete block design with three replications. Analysis of variance indicated that genotypes were significantly different for all traits. The diallel analysis by Griffing`s method showed highly significant differences for GCA for number of panicles per plant (PN), amylose content, gelatinization temperature and head rice recovery. Highly significant differences were also observed for both SCA and REC for all evaluated characters. The results showed that the grain yield (GY), number of filled grains (FGN), 100-grain weight (HGW) and GC were controlled by non-additive gene action, while the inheritance of PN, AC, GT and HRR were largely controlled by additive gene effects, although non- additive genetic components and reciprocal effect were also involved, which suggest that a selection process could be done in the early generations. The two improved lines (RI18442-1 and RI18430-46) were found to be good general combiners for GY and FGN, while the best combiners for PN was Tarom Mohali and IR50 and for HGW was RI18430-46. The best combinations for GY were RI18430-46 × IR50, Tarom Mohali × RI18447-2 and Daylamani × RI18430-46. The good hybrids were Tarom Mohali × IR50, Line23 × RI18447-2 and Line23 × Backcross line for AC. Narrow sense heritability showed that the GY and GC had the lowest values while the other traits had either moderate or high heritability, which indicates selection in the early generations could be done to fix the favorable genes. In present study, narrow sense heritability was high for AC and moderate for GT, PN and HRR.