Cotton breeders must be concerned with yield and fibre quality of naturally coloured cottons as these are inferior than to white linted cottons. Limited use of heterosis and correlation studies have been made in coloured cotton in India to maintain a strong, competitive edge in today’s world market. Totally 18 F1 (Gossypiumhirsutum) coloured cotton hybrids were produced in 1995 and 1996 by crossing six white linted female lines F-505, LRK-516, F-846, HS-6, P-31 and LH-1134 with three colour linted male testers 84 (green linted), 2,077 (medium brown linted) and H.Taskant (dark brown linted). Hybrids and parents were assessed in 1996 and 1997 for heterobeltosis, correlations and to know the direct and indirect effects of eight agronomic and four fibre quality traits. Analysis of variance indicated the existence of significant variation among F1 hybrids and parents for agronomic and fibre quality traits. F1 coloured cotton hybrids had higher seed cotton yield, number of bolls/plant, fibre length, fibre strength and heavier bolls in comparison to parents. Positive heterotic potential in three different F1 coloured cotton hybrids P-31 × 84 (green), F-846 × H.Taskant (dark brown), F-505 × 2077 (medium brown) and LH-1134 × H.Taskant (dark brown) indicated that there is no lint colour specificity for production of higher yielding hybrids. Similar results have been obtained for important fibre quality trait like fibre strength. It was also observed that even low yielding white and coloured linted parents can be crossed to select for high heterosis. Both at genotypic and phenotypic levels, seed cotton yield exhibited positive and significant association with number of bolls, seed cotton weight per boll, plant height, number of monopodia/plant, fibre strength and mature fibre % suggesting that any selection among correlated traits might lead to improvement in seed cotton yield. Number of sympodial branches, seed index and 2.5% span length and micronaire value had non-significant negative association with seed cotton yield. Path analysis identified boll number per plant and seed cotton weight per boll as the principal yield contributing attributes.