Conventional analysis of spatially correlated data in inadequately blocked field genetic trials may give erroneous results that would seriously affect breeding decisions. Forest genetic trials are commonly very large and strongly heterogeneous, so adjustments for microenvironmental heterogeneity become indispensable. This study explores the use of geostatistics to account for the spatial autocorrelation in four Pinus pinaster Ait. progeny trials established on hilly and irregular terrains with a randomized complete block design and large blocks. Data of five different traits assessed at age 8 were adjusted using an iterative method based on semivariograms and kriging, and the effects on estimates of variance components, heritability, and family effects were evaluated in relation to conventional analysis. Almost all studied traits showed nonrandom spatial structures. Therefore, after the adjustments for spatial autocorrelation, the block and family × block variance components, which were extremely high in the conventional analysis, almost disappeared. The reduction of the interaction variance was recovered by the family variance component, resulting in higher heritability estimates. The removal of the spatial autocorrelation also affected the estimation of family effects, resulting in important changes in family ranks after the spatial adjustments. Comparison among families was also greatly improved due to higher accuracy of the family effect estimations. The analysis improvement was larger for growth traits, which showed the strongest spatial heterogeneity, but was also evident for other traits such as straightness or number of whorls. The present paper demonstrates how spatial autocorrelation can drastically affect the analysis of forest genetic trials with large blocks. The iterative kriging procedure presented in this paper is a promising tool to account for this spatial heterogeneity.