Genetic parameters were studied in a set of five parental lines and ten F₂ populations in rice (Oryza sativa L.) under aerobic conditions during dry season 2013-14. The selected F₂ plants were forwarded to generate F₃ families during subsequent dry season. For all the characters in F₂ populations observed, the magnitude of PCV was higher than the GCV indicating lower environmental influence on those characters. Genetic advance and heritability indicated high genetic advance as percent mean coupled with high heritability suggesting that there is a pre-ponderance of additive gene action for the traits, plant height, number of tillers, number of panicles, 100-grain weight, leaf width, panicle exsretion and grain yield plant^-1. Correlation analysis revealed that grain yield exhibited significantly positive correlation with most traits observed so also path analysis revealed positive direct effect on most plant growth and yield contributing traits. Characters such as days to flowering, grain width, panicle exsertion and plant height had negative direct effect on grain yield. The intergeneration correlation and regression coefficient between F₂ and F₃ generations of crosses IR-64 × MAS- 26 and IR-64 × IM-114 were significant for days to 50% flowering, days of maturity, plant height, productive tiller per plant, 100- grain weight, panicle length and grain yield. However, cross IR-64 × OYC-183 was significant for all the traits except productive tiller per clump showed non-significant correlation. The higher water use efficiency (WUE) was exhibited for cross IR64 × MAS-26 (5.60%)while cross OYC-183× Karimundhaga had the least (2.35%) WUE. The study revealed that there were several segregants performing well under aerobic condition and selection based on genetic parameters was effective in identifying superior genotypes in F₂ and F₃.