The extent to which genetic gain achieved from selection programs under strictly controlled environments in the nucleus that can be expressed in commercial production systems is not well-documented in aquaculture species. The main aim of this paper was to assess the effects of genotype by environment interaction on genetic response and genetic parameters for four body traits (harvest weight, standard length, body depth, body width) and survival in Red tilapia (Oreochromis spp.). The growth and survival data were recorded on 19,916 individual fish from a pedigreed population undergoing three generations of selection for increased harvest weight in earthen ponds from 2010 to 2012 at the Aquaculture Extension Center, Department of Fisheries, Jitra in Kedah, Malaysia. The pedigree comprised a total of 224 sires and 262 dams, tracing back to the base population in 2009. A multivariate animal model was used to measure genetic response and estimate variance and covariance components. When the homologous body traits in freshwater pond and cage were treated as genetically distinct traits, the genetic correlations between the two environments were high (0.85–0.90) for harvest weight and square root of harvest weight but the estimates were of lower magnitudes for length, width and depth (0.63–0.79). The heritabilities estimated for the five traits studied differed between pond (0.02 to 0.22) and cage (0.07 to 0.68). The common full-sib effects were large, ranging from 0.23 to 0.59 in pond and 0.11 to 0.31 in cage across all traits. The direct and correlated responses for four body traits were generally greater in pond than in cage environments (0.011–1.561 vs. −0.033–0.567 genetic standard deviation units, respectively). Selection for increased harvest body weight resulted in positive genetic changes in survival rate in both pond and cage culture. In conclusion, the reduced selection response and the magnitude of the genetic parameter estimates in the production environment (i.e., cage) relative to those achieved in the nucleus (pond) were a result of the genotype by environment interaction and this effect should be taken into consideration in the future breeding program for Red tilapia.