Heterosis and the nature of combining ability were studied in 28 F1 hybrids made by selected 8 inbred lines using 8×8 diallel mating system (Griffing's Model I, Method IV) excluding reciprocals in maize for grain yield and yield contributing characters. The significant estimates of GCA and SCA variances suggested the importance of both additive and non-additive gene actions for the expression of the traits studied. The variances for general combining ability (GCA) were found significant for days to pollen shedding, days to silking, plant height, ear height, 1000-grain weight, and yield. Specific combining ability (SCA) was significant for all the characters except yield. Nonsignificant specific combining ability (SCA) variance for yield suggests that this trait predominantly controlled by the additive type of gene action. Variances due to GCA were much higher in magnitude than SCA for all the characters indicating the superiority of additive gene effects for the inheritance of this trait. Parents P4 and P6 were the best general combiner for high yield, P5 for grain weight and parents P7 and P8 for earliness and dwarf plant type. Seven crosses P1×P5, P1×P7, P2×P4, P3×P5, P4×P5, P4×P8, and P6×P7 exhibited positive SCA effects for grain yield. Considering BHM9 as a check, the percent heterosis for grain yield varied from-85.76 to 10.83%. Three crosses exhibited significant and positive heterosis viz. P2×P4 (10.83%), P6×P7 (9.72%) and P4×P6 (1.78%) over the check BHM9. Considering the performance of SCA effects and heterosis, two crosses P2×P4 and P6×P7 could be utilized for developing high yielding hybrid varieties as well as for exploiting hybrid potency.