Knowledge of combining ability and genetic diversity are important prerequisites for the development of outstanding hybrids that are tolerant to high plant density. This work was carried out to assess general combining ability (GCA) and specific combining ability (SCA), identify promising hybrids, estimate genetic diversity among the inbred lines and correlate genetic distance to hybrid performance and SCA across different plant densities. A total of 28 F1 hybrids obtained by crossing eight adverse inbred lines (four local and four exotic) were evaluated under three plant densities 59,500 (D1), 71,400 (D2) and 83,300 (D3) plants ha−1 using spilt plot design with three replications at two locations during 2018 season. Increasing plant density from D1 to D3 significantly decreased leaf angle (LANG), chlorophyll content (CHLC), all ear characteristics and grain yield per plant (GYPP). Contrarily, days to silking (DTS), anthesis–silking interval (ASI), plant height (PLHT), ear height (EHT), and grain yield per hectare (GYPH) were significantly increased. Both additive and non-additive gene actions were involved in the inheritance of all the evaluated traits, but additive gene action was predominant for most traits. Inbred lines L1, L2, and L5 were the best general combiners for increasing grain yield and other desirable traits across research environments. Two hybrids L2 × L5 and L2 × L8 were found to be good specific combiners for ASI, LANG, GYPP and GYPH. Furthermore, these hybrids are ideal for further testing and promotion for commercialization under high plant density. Genetic distance (GD) among pairs of inbred lines ranged from 0.31 to 0.78, with an average of 0.61. Clustering based on molecular GD has effectively grouped the inbred lines according to their origin. No significant correlation was found between GD and both hybrid performance and SCA for grain yield and other traits and proved to be of no predictive value. Nevertheless, SCA could be used to predict the hybrid performance across all plant densities. Overall, this work presents useful information regarding the inheritance of maize grain yield and other important traits under high plant density.