The present investigation was undertaken in sponge gourd in order to estimate heterosis, combining ability and nature of gene action involved in the inheritance of fruit yield and its component characters, viz., days to open first female flower, node to first female flower, node to first male flower, days to first picking, length of vine (m), number of primary branches per vine, number of fruits per vine, ten fruit weight (g), fruit length (cm), fruit girth (cm), fruit yield per vine (kg), and fruit fly infestation (%). The crosses were attempted by adopting diallel analysis (excluding reciprocals) involving ten elite genotypes during summer - 2011. The resultant 45 hybrids along with their parents and one standard check (Pusa Chikni)were evaluated in randomized block design with three replications during kharif - 2011 at Instructional Farm, College of Agriculture, Junagadh Agricultural University, Junagadh. The analysis of variance for experimental design revealed highly significant mean square differences due to genotypes for all the characters except days to first picking and fruit girth indicating sufficient amount of genetic variability for the traits studied. The magnitude of heterotic effects was high for fruit yield per vine (kg), fruit weight, fruit length and number of fruits per vine. The positive and significant standard heterosis for fruit yield per vine and some of its component traits were recorded in the crosses, Pusa Chikni x ASGS 08-37, Pusa Chikni x ASGS 08-40, ASGS 08-38 x ASGS 06-30, ASGS 06-30 x JSG 05-7 and ASGS 08-40 x ASGS 08-37. The general and specific combining ability variances were highly significant for all the characters. This indicated that both additive and non-additive type of gene effects played a vital role in the inheritance of all these traits. However, the sca variance component was higher in magnitude than respective gca variance for all the characters except for days to first picking, suggested greater role of non-aditive genetic effects in the inheritance of these characters. The potence ratio less than unity confirmed the preponderance of non-aditive gene action for all the traits studied and emphasized the utility of hybrid breeding approach to exploit existing heterosis in the sponge gourd. The estimate of gca effects indicated that parents Pusa Chikni, ASGS 08-37, ASGS 06-30 and JSG 05-7 were found to be the good general combiners for fruit yield per vine and some of its component traits. . ASGS 08-37 and ASGS 08-40 both showed significant gca effects in desirable direction for node to first female flower and days to first picking. Considerable harmony was observed between per se performance of parents and their gca effects for fruit yield and most of its traits. Crosses showing high sca effects for fruit yield also depicted high sca effects for three or more of its yield components. The cross Pusa Chikni x ASGS 08-37 had high sca for fruit yield per vine due to good x good general combiner parents. The cross displaying high sca effects did not always involve parents with high gca effects. The per se performance of hybrids for various traits was not related with their sca effects. Estimation of variance components of D, H1 and H2 revealed that the additive as well as non-additive gene effects were involved in the inheritance of most of the traits studied with preponderance of non-additive gene action for all the traits except fruit girth. Average degree of dominance revealed over dominance for all the traits except fruit girth. Asymmetrical distribution of positive and negative genes in the parents was observed for most of the traits and nearly symmetrical distribution for days to first picking, length of vine and number of fruits per vine. Narrow sense heritability was found to be less than 50 per cent for all the traits except number of primary branches per vine, ten fruit weight and fruit length. The overall results of present investigation suggested that reciprocal recurrent selection procedure would mop up the additive gene effects and would also allow dissiparation of non-additive gene effects. Biparental mating may also be used in the segregating generations to break the undesirable linkages and to exploit both additive and non-additive gene effects simultaneously for isolating superior transgressive segregants in later segregating generations. Due to preponderance of non-additive gene effects of fruit yield and most of its component traits, heterosis breeding would also be practically feasible in crop like sponge gourd.