Several methods are available for estimating heritability in disomic species, including parent-offspring regression, realized heritability, intraclass correlations of recombinant inbred lines, and diallel-cross analysis. Estimates were obtained by these various methods for a set of eight bread wheat (Triticum aestivum) lines adapted to the East African highlands, which had been intercrossed and selfed in a half-diallel arrangement to give F1, F2 and F3 generations, and F6 recombinant inbred lines. Significant genetic variation existed among parents and crosses for both grain yield and yellow rust resistance in all generations. Based on the heritability calculated from the analysis of F6 recombinant inbred lines, analysis of the F2 diallel crosses was recommended for determining the heritability of both characters in early segregating generations. The results also suggest that a form of tandem selection may be effective in developing locally adapted germplasm which combines high grain yield with yellow rust resistance.