Pedigree analysis is an important tool for assessing genetic variability and detecting heritage patterns in domestic animals. This study aimed to (1) assess genetic variability, (2) estimate genetic parameters for daily milk yield (DMY), fat content (FC), and protein content (PC), and (3) estimate the impact of inbreeding on the aforementioned dairy traits in Istrian sheep breed. The generation interval was 3.8 years. The average family size per sire and dam was 13.5 and 1.6, respectively. There were 923 female and 282 male founders (f), 105 male and 137 female effective founders (fe ), and 72 male and 95 female effective ancestors (fa ). A total of 28 sires and 34 dams explained 50% of the genetic variability. The effective number of male and female founder genomes (fne ) was 33 and 53, respectively. Low fe/f (0.37 and 0.15), high fe/fa (1.45 and 1.44), and low fne /fe (0.45 and 0.39) for males and females indicated overuse of a small number of animals in reproduction and substantial loss of founder alleles. The heritabilities of MY, FC, and PC were 0.09, 0.03, and 0.06, respectively. Genetic correlations between DMY and FC, DMY and PC, and FC and PC were −0.22, −0.27, and 0.70, respectively. Regression of phenotypes on inbreeding coefficient () within the animal genetic model revealed negligible inbreeding depression for all traits (p<.01; a 1% increase in decreased DMY, FC, and PC by 0.002 kg/day, 0.01%, and 0.002%, respectively). Regression of breeding values on was insignificant for all traits (p>.05). HIGHLIGHTS Genetic diversity, genetic parameters and the impact of inbreeding on dairy traits were estimated using pedigree information. Results indicate recent loss of genetic variability, low heritability and negligible impact of inbreeding on dairy traits. Genomic optimum contribution selection is the best solution to achieve genetic gain and slow down the loss of genetic variability in this population.