Genetic variability, heritability along with genetic advance and correlation of traits are essential for crop improvement. In the present investigation, 246 F3 progenies derived from an intraspecific cross KC 2 and MCU 5, were evaluated for observing variation and correlation among yield components and fibre quality traits. The variability analysis showed close correspondence between phenotypic and genotypic variance for number of sympodial branches per plant, boll weight, ginning outturn, lint index, seed index, 2.5% span length, bundle strength, micronaire value and elongation per cent indicating less environmental influence. Phenotypic coefficient of variation was found to be greater than genotypic coefficient of variation for all the characters, indicating environmental influence on these traits. Moderate phenotypic and genotypic coefficient of variation estimates were obtained for boll weight, micronaire value, lint index, elongation per cent, number of sympodial branches per plant and seed index and hence the best possibilities of improvements are through selection. High heritability, coupled with high genetic advance was observed for boll weight, single plant yield, lint index and micronaire value, indicating additive gene effects. The directional selection for these traits could be effective for desired genetic improvement. Ginning outturn, 2.5% span length, bundle strength and uniformity ratio showed high heritability coupled with low genetic advance, indicating non-additive gene action and heterosis breeding can be employed for improving these traits. Significant phenotypic correlation was found for plant height, number of sympodial branches per plant, number of bolls per plant, boll weight, lint index and seed index. Higher heritability, genetic advance and correlation indicated that selection may be helpful for the improvement of yield and quality of cotton.