In breeding is known to impair the health, fertility, and productivity of dairy cattle and other livestock species. Mating programs can address inbreeding concerns on the farm, at least in the short term, but long-term control of inbreeding in a dairy population requires consideration of relationships between young bulls entering AI progeny test programs. The present study discusses an application of optimal contribution methodology to selection of young AI bulls in the five major US dairy breeds. Elite cows and active AI sires from the Ayrshire, Brown Swiss, Guernsey, Holstein, and Jersey breeds were considered as potential bull parents. Genetic merit of selected sires and dams was maximized subject to various constraints on the mean additive genetic relationship within the selected group. Relationships between selected parents can be reduced substantially relative to current levels, but the corresponding reduction in genetic merit may be large. This loss in genetic merit occurs due to lower selection intensity, although it is mainly a reflection of a larger number of bull parents (with progeny more evenly distributed among these parents), rather than selection of genetically inferior "outcross" parents that wouldn't otherwise have been considered. Selected parents were generally older and slightly less inbred than those that would have been chosen had inbreeding been ignored. Although severe restrictions on relationships can be costly, in terms of lost genetic progress, it appears that moderate constraints can keep relationships at a manageable level without a significant loss in genetic merit. Cooperation between breed associations and several competing AI companies may be required to facilitate implementation of this methodology in dispersed populations, but if this can be accomplished, prospects for achieving a balance between inbreeding and selection seem positive.