This paper aims to discover the genetic parameters underlying the physiological efficiency and panicle characters of hill rice plants. In order to improve these characters, it is crucial to learn the nature and magnitude of gene action involved in inheritance of panicle and physiological traits. With this purpose, we combined a line × tester analysis of crosses involving local cultivars and indigenous and exotic germplasm grown at the northeastern hill region of India. From the study it follows that number of tillers per hill, number of ear bearing tillers per hill, panicle length, panicle weight, number of grains per panicle, number of filled grains per panicle, pollen fertility, spikelet fertility, leaf area index, total chlorophyll content and harvest index were mainly under the control of non-additive gene action, while total dry matter accumulation and grain yield per plant were under the control of additive gene action. The genotypes DR 92, Ngoba, IET 16451 and UPR 1425-1-1-4 were identified as superior parents with high performance and significant general combining ability effects. For heterosis breeding six cross combinations, viz., DR 92/IET 16471, DR 92/UPR 1425-1-1-4, DR 92/IET 15482, Ngoba/IET 16469, Ngoba/H274-27-24, Manipuri/IET 16451, and for recombination breeding two cross combinations, viz., DR 92/IET 16470 and Ngoba/UPR 1425- 1-1-4, were found suitable to ameliorate the panicle and physiological traits of hill rice grown in northeastern India.