Maintaining low levels of rust incidence (caused by Puccinia novopanici) in switchgrass (Panicum virgatum L.) breeding populations is a priority for the USDA-ARS program engaged in improving cultivars for high biomass yield and quality. Essential to this goal is the unbiased and accurate estimation of genetic parameters to predict the merits of parents and progeny. Spores of the fungus were inoculated in greenhouse-grown seedling progeny of 31 half-sib families in generation 2 (Gen 2) of a composite Summer × Kanlow population for evaluation of rust incidence on the leaves with a 0–9 rating scale. Two parents were later chosen to cross and develop a linkage mapping population as Gen 3. The Gen 2, 3, and Kanlow seedlings were transplanted into the field located near Mead, NE, in early June 2020 and laid out as a replicated row–column design with six blocks of single-row plots of five plants each. The field trial was rated in September 2021 and 2022 with a 0–4 scale. Lab and field data were subjected to univariate linear mixed models via the restricted maximum likelihood to extract the variance components needed to predict the breeding values. The additive genetic variation was substantial (p < 0.01), enough to result in high heritability estimates ranging from 0.42 ± 14 to 0.73 ± 0.09 at the individual and family mean levels. This result implies that rust resistance is under strong genetic control to use mass selection for obtaining satisfactory gains. A possible rust incidence x year interaction was detected with a Spearman correlation of breeding values of −0.38, caused by significant rank changes of the Gen 3 genotypes in 2022 (a high heat and drought year). Genetic gains were predicted to reduce rust incidence scores by at least two points on the rating scale when selecting backwards, and by one point when selecting individual candidates as parents of the next generation. Faster gains (31 and 59%) were realized relative to the second generation by respectively selecting the top 10% of the families in Gen 3 or the top 10% of genotypes within this group. Based on these results, strategies for controlling the incidence of rust will be developed to optimize gains in the other traits of economic importance.