Efficiency of objective oriented breeding programs is usually rated by the genetically improved high yielding varieties/hybrids with better quality and having adaptability to a wider range of agro-climatic conditions. Breeding for superior combinations regarding quantitative and qualitative traits for high productivity, adaptability and better quality needs basic understanding of the genetic mechanisms governing additive and dominance gene effects and their interactions. In the present study, fifteen inbred lines were planted to finally select eight suitable ones to be used as parental lines. The research was conducted at the research area of Maize, Sorghum and Millet Programme, National Agricultural Research Centre, Islamabad during autumn, 2007. In order to develop a complete set of 8 x 8 diallel, seed of F1, BC1, BC2 and F2 among drought prone and drought tolerant groups was produced during 2008. Experiments for genetic study were maintained in rain free spring season during 2008 and 2009 in two separate trials. One trial was raised at normal level of irrigation (recommended for raising commercial crops), while irrigation was stopped in the second trial to induce moisture stress one week prior to the start of anthesis to two weeks after completion of silk emergence. Data were recorded on leaf rolling, days to pollen shed, days to silk emergence, anthesis-silking interval (ASI), plant height, ear height, number of kernel rows per ear, number of kernels per row, 100-kernel weight, shelling percentage, grain yield per plant, protein percentage, lysine percentage and tryptophan percentage. These data were analysed following Hayman''s approach of diallel analysis and generation mean analysis was performed accordingly. Findings of Hayman’s approach revealed that over dominance gene actions were important for most of the traits studied under normal irrigation supply. Additive gene actions with partial dominance for days to silk emergence, protein, lysine and tryptophan percentages were noticed under normal irrigation. Furthermore, inheritance of leaf rolling, days to silk emergence, plant height, number of kernels per row, which exhibited over-dominance behaviour during normal irrigation, showed partial dominance with more additive gene effects under water stress conditions at flowering. However, the inheritance of rest of the traits was noticed to be unchanged under drought conditions. Generation mean analysis inferred that dominance gene actions were important to control leaf rolling, days to pollen-shed, days to silk emergence, anthesis-silking interval (ASI), ear height, number of kernel rows per ear, 100-kernel weight, shelling percentage and grain yield per plant. Both dominance and additive inheritance was at the interplay of silk emergence, plant height and number of kernels per row, whereas, additive genetic effects were important for protein, lysine and tryptophan percentages. Heterosis in traits including yield and quality including leaf rolling, days to pollen shed, days to silk emergence, anthesis-silking interval, plant and ear heights, number of kernels per row, 100-kernel weight and grain yield per plant were found important for yield related traits. It is interesting to note no significant change in protein quality traits, that is, grain protein and lysine percentages, was found under both regimes of irrigation. This elaborated the relative stability of protein quality parameters under drought conditions. This study identified certain inbred lines like NCMLD1 and their combinations (e.g. NCMLQ2 x NCMLD1) of significant importance and use in the development of maize hybrids. The material identified could be of prime importance to the local breeders for recurrent selection breeding programme and population improvement in order to develop high yielding and drought tolerant varieties/hybrids of quality protein maize (QPM).