Although alfalfa (Medicago sativa L.) is considered an outcrossing species, the self‐pollination incidence during insect pollination can be substantial, with an observed 30% average selfing rate. Despite this, alfalfa breeders utilizing space‐plant evaluation nurseries make no attempt to discriminate self‐pollination‐derived progeny (selfs) from outcross progeny. Due to alfalfa's substantial inbreeding depression, the selfed individuals have much lower breeder utility. This study examines an alfalfa space‐plant breeding nursery in which selfed and outcross progeny had been identified using DNA markers for the following phenotypic traits: plant vigor, fall height, fall dormancy, first and second winter survival, plant lodging, and profusion of flowering. Trait means, phenotypic and additive variances, and narrow‐sense heritabilities on a halfsib mean basis were determined for selfed and outcross progeny. For most traits, inbreeding depression was severe, with approximately 80% reductions in performance. Selfed progeny for most traits had reduced phenotypic variances compared with outcross progeny. No differences in estimated additive variance and heritabilities were observed between the two types of progeny. Assuming a 30% selfing rate and a selection intensity less than or equal to 10%, we would expect to select few if any selfed progeny from a space‐plant nursery that had plant vigor phenotypic distributions observed in this study. The estimated maximum loss in genetic gain due to the presence of selfed progeny in breeding nurseries for selection intensities from 1 to 10% was estimated at a 10% genetic gain reduction. We conclude that selfed progeny in breeding nurseries are a hindrance, and if possible, they should be minimized or eliminated.