Seven genetically diverse pepper inbred lines were crossed in a half diallel to evaluate the performance of hybrids and determine heterosis over mid-parent, high-parent and standard control for various characteristics. The study was undertaken in the field and greenhouse using a randomized complete block design with three replications during 2001/02. Hybrids generally showed good overall performance for most of the characteristics compared with the inbred lines. Three of the 21 hybrids significantly out-yielded the standard control (Bakko Local). Five of the inbred lines and all the hybrids were earlier to flower and mature compared with the control. Substantial mid-parent (MPH), high-parent (HPH) and standard (SH) heterosis were observed for the majority of characteristics studied. Mean MPH and SH were high and positive for fruit yield, plant height, fruit diameter, fruit weight, pericarp thickness and fruit number per plant. High positive HPH was observed in fruit yield per plant and plant height. For days to flowering, days to maturity and fruit maturation period, the overall mean MPH, HPH and SH were negative. It was concluded that pepper hybrids of higher yield potential, good fruit characteristics and early maturation can be developed from appropriate parents.