Data from 1390 to 1902 Dohne Merino progeny of a nucleus flock were used toevaluate environmental influences, and to obtain heritability estimates for live weight at birth, weaning and yearling age and for yearling fleece traits. Estimated breeding values for yearling live weight, clean fleece weight and fibre diameter were obtained by backsolution, averaged for birth years, and used to reflect genetic trends. Rams and singles were generally heavier with heavier fleeces (p < 0.05) than ewes and multiples. Rams and multiples produced stronger (p < 0.05) wool than ewes and singles. Age of dam only affected live weight traits significantly (p < 0.10). Expressed relative to the total phenotypic variation, parameter estimates for birth weight were 0.04 ± 0.03 for direct additive genetic variation, 0.10 ± 0.06 for maternal additive variation, and 0.17 ± 0.05 for maternal permanent environmental effects. Only direct additive effects (0.06 ± 0.04) and maternal permanent environmental effects (0.21 ± 0.04) resulted in an improvement in log likelihood values for weaning weight. Only direct additive effects were required for yearling live weight and fleece traits. Direct heritability estimates were 0.24 ± 0.06 for live weight, 0.35 ± 0.06 for clean fleece weight, 0.66 ± 0.05 for clean yield, 0.35 ± 0.06 for staple length and 0.43 ± 0.07 for fibre diameter. Genetic changes over the period 1980 to 1994 amounted to 0.145 kg p.a. (r= 0.85) for yearling live weight, 0.010 kg p.a. (r= 0.96) for clean fleece weight and -0.011 µm p.a. (r = -0.38) for average fibre diameter. It was concluded that adequate genetic variation exists for the genetic improvement of traits measured at yearling age, as reflected by the observed genetic trends.