Abstract: Field experiments were conducted using fourteen rice genotypes during the main rainy seasons of 2009 and 2010 at three rainfed upland locations of Southwest Ethiopia to estimate the genetic variability, heritability and correlation coefficients of grain yield and yield contributing traits in upland rice. The experiments were laid down in a randomized complete block design with three replications. Highly significant (p<0.01) variation was obtained for days to 50% flowering, days to 85% maturity, plant height, panicle length, spikelets per panicle and thousand grains weight. Significant difference (p<0.05) were noted for panicles per plant, grains per panicle, total spikelet fertility and grain yield. Days to 50% flowering, plant height, grains per panicle, spikelets per panicle, thousand grains weight and grain yield showed relatively high GCV and PCV estimates. High heritability was obtained for plant height (92.17%), followed by 50% flowering (90.16%), thousand grains weight (83.17%), days to 85% maturity (82.45%), panicle length (79.25%) and spikelet per panicle (60.25%) which indicates high heritable portion of variation. High to medium estimates of heritability and genetic advance were obtained for plant height, days to 50% flowering, panicles per plant, spikelets per panicle, grains per panicle and thousand grains weight, indicating the roles of additive gene action and a good scope of selection using their phenotypic performance. Grains per panicle had maximum positive direct effect and highly significant (r = 0.906**) genotypic correlation coefficient with grain yield. The present study revealed that for increasing rice yield in upland ecology, a genotype should possess more number of grains per panicles, tillers per plant and panicle per plant, high spikelet fertility and large panicle size.