Eight bread wheat lines, showing a wide response to yellow rust, were intercrossed in all combinations to provide F1 and F2 diallels for assessing disease incidence and its effect on yield and related characters at low- and high-rust locations in Uganda. Average yield loss over the trial period at the high-rust site due to all foliar diseases was 83%, of which yellow rust accounted for 25%. Rust resistant material outyielded susceptible material in control plots untreated with fungicide by 138%. At the low-rust location, resistant and susceptible material had comparable yields within treated and control plots, indicating that no significant yield loss was incurred by growing resistant material in the absence of rust pressure.