The objective of this study was to estimate heritability and crossbreeding parameters (breed and heterosis effects) of various fatty acid (FA) concentrations in milk fat of New Zealand dairy cattle. For this purpose, calibration equations to predict concentration of each of the most common FAs were derived with partial least squares (PLS) using mid-infrared (MIR) spectral data from milk samples (n=850) collected in the 2003–04 season from 348 second-parity crossbred cows during peak, mid and late lactation. The milk samples produced both, MIR spectral data and concentration of the most common FAs determined using gas chromatography (GC). The concordance correlation coefficients (CCC) between the concentration of a FA determined by GC and the PLS equation ranged from 0·63 to 0·94, suggesting that some prediction equations can be considered to have substantial predictive ability. The PLS calibration equations were then used to predict the concentration of each of the fatty acids in 26 769 milk samples from 7385 cows that were herd-tested during the 2007–08 season. Data were analysed using a single-trait repeatability animal model. Shorter chain FA (16 : 0 and below) were significantly higher (P<0·05) in Jersey cows, while longer chain, including unsaturated longer chain FA were higher in Holstein-Friesian cows. The estimates of heritabilities ranged from 0·17 to 0·41 suggesting that selective breeding could be used to ensure milk fat composition stays aligned to consumer, market and manufacturing needs.