The study was set out to estimate heterosis, combining ability, heritability, gene action and correlation of grain yield and other agronomic traits under water stress and non-water stress conditions. Seven maize varieties were crossed to six inbred lines resulting in 42 top cross hybrids. The 13 parents, 42 hybrids and a check were evaluated for drought tolerance under water stress and non-water stress conditions at the Institute for Agricultural Research Station farms at Samaru and Kadawa during 2012/2013 dry season. Data were collected for number of days to 50% tasseling (DT), number of days to 50% silking (DS), anthesis-silking interval (ASI), plant height (PHT), ear height (EHT), leaf senescence (SEN), number of ears per plant (NEP) and grain yield (GY). Among the top cross hybrids, Sammaz 34 x P2 recorded the highest GY (2030.99kg/ha) which was 44.6% higher than the check under non-water stress condition and 143% increase relative to the check under severe-water stress condition. Sammaz 34 x P2 and Sammaz 36 x P2 recorded highest GY estimates under severe-water stress condition across locations (2031kg/ha and 1495kg/ha, respectively). All the traits recorded higher values of phenotypic coefficient of variation than genotypic coefficient of variation under the three different water stress conditions in both locations and across locations. This indicates presence of high variability for these traits and provides ample scope for selection of superior genotypes. Broad sense heritability estimates generally ranged from moderate to high in both locations and across locations under the three different water stress conditions indicating considerable potential for development of drought tolerant and high yielding varieties. The ratios of general combining ability to specific combining ability variances across locations were less than unity for all the traits under the three conditions indicating importance of non-additive gene action in controlling these traits. The results revealed that Sammaz 17 was a good general combiner among the seven female parents while P3 was a good general combiner for GY among the male parents under water stress condition across locations. The top cross hybrid Flint Q x P8 which involved parents with high x low general combining ability effects was promising as it had highly significant positive heterosis for GY (181.48%) under severe-water stress condition and also exhibited positive specific combining ability status for GY (134.92) under severe-water stress conditions across locations. Correlations with grain yield showed that DT, DS and ASI were negatively correlated with GY while PHT, EHT and NEP were positively correlated with GY under the three water stress conditions. This indicates that corresponding increase in GY can be achieved through selection of the positively correlated traits under both non-water stress and stress conditions across locations. Molecular approaches which offer exciting ways of shortening the time for variety development is recommended along with the conventional breeding strategies to develop drought tolerant hybrids.