The nature and extent of heterosis for grain yield and its component characters was estimated in a seven-parent F1-diallel cross in rice under the cold stress conditions of Palampur, representing sub-temperate climate of the mid hills of Himachal Pradesh. The highest heterotic effects for grain yield were observed in 'Himalaya 1'/'Phul Patas 72' and 'China 988'/'Himdhan' hybrids, which gave 60.36 and 32.48% heterosis, respectively, over mid parent, 38.76 and 26.86% heterosis, respectively, over high parent and 32.30 and 26.86% heterosis, respectively, over the best variety, 'Himdhan'. Heterosis for grain yield in these crosses was due to an increase in tiller number, panicle length, spikelets/panicle and 1,000-grain weight. Large number of crosses exhibited significant heterosis for high spikelet sterility and the majority of them had significant heterosis for late flowering, taking more than 120 days to flower, which resulted in lack of heterosis for grain yield in such crosses due to cold stress at the reproductive stage.