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Estimates of genetic variance are needed for ranking of inbred lines for selection and for prediction of response to selection. The objectives of this study were to determine whether including relationships among inbred lines affects estimates of genetic variance and whether random association among inbred lines mated together affects estimates. Genetic variance was estimated with different models with restricted maximum likelihood for eight traits from matings of inbred lines from two heterotic groups (Iowa Stiff Stalk Synthetic, SSS, and unrelated to SSS, NSSS) of corn (Zea mays L.). For each comparison relationships among one or both of the inbred lines were either considered or ignored. With relationships ignored, variance due to inbred line effects was reduced on average by 33% for SSS inbred lines and 18% for NSSS inbred lines. Estimates were also reduced for variance of SSS inbred lines by 11 to 41% when calculations were done with effects of NSSS inbred lines considered to be fixed and 6 to 31% for variance of NSSS inbred lines with SSSS inbred lines considered fixed. The increase in variance with relationships among inbred lines considered indicates that potential gain from selection would be greater than predicted from estimates of variance due to line effects calculated ignoring relationships among lines. Estimates of inbred line variance within a heterotic group were usually smaller when lines in the other group were considered fixed. This result suggests that variance due to line effects can be inflated due to association of inbred lines between heterotic groups.