Exploiting genetic variation through interspecific breeding has improved cotton yield, fibre properties and adaptability. The objectives of this study were to examine heritability and predicted selection response of yield components and fibre properties in a recombinant inbred line (RIL) population from an inter-specific cross between Gossypium hirsutum (Gh) variety Guazuncho 2, and G. barbadense (Gb) line VH8-4602. A population of 93 and 82 RILs was tested in two seasons, with two parents and local controls, Sicot 75 (Gh) and Sipima 280 (Gb) in field experiments. Seed cotton samples hand harvested before and after defoliation were used to measure lint percent, boll weight, 100 seed weight and the lint to measure fibre length, uniformity, short fibre index (SFI), elongation, strength, micronaire, maturity ratio (MR), percent of maturity (PM) and fineness. There was large phenotypic variation for individual traits and transgressive segregation occurred in lint percent, lint weight/seed, fibre no./seed, uniformity, SFI, elongation, MR and PM. Narrow sense heritabilities were moderate for yield components (34.3- 41.2%) and for key fibre properties, length, strength, micronaire and fineness (38.3-42.1%), which led to a predicted selection response of 6.7-24.0% for yield components and 3.9-10.9% for key fibre properties under a selection intensity of 10%. Favourable associations were found between key fibre properties, but an adverse association between lint percent and each of these fibre properties. Only five RILs were identified with desirable combinations. The results demonstrated the value of exploiting inter-specific variation to develop cotton germplasm and how breeding strategies can be improved.