Parents of heterotic hybrids belong to different heterotic groups with high genetic divergence. Classification of traditional Assam rice germplasm in different pools would maximize the heterosis and ensure food security for over 35 million people. In the present investigation, 53 polymorphic markers detected 133 alleles across 60 upland rice genotypes of Assam, with an average of 2.5 alleles per marker. RM293 having the highest PIC value of 0.655, was the most appropriate marker for discriminating among genotypes. The genetic divergence using the Unweighted Neighbour-Joining (UNJ) method grouped the 60 genotypes into three major clusters. The eleven most divergent genotypes were subject to diallel analysis following Model 1 Method II of Griffing (1956) for combining ability and heterosis estimates. Lack of correlation between heterosis and genetic distance could be attributable to using a subset of markers not linked to yield or concerned. In genetic distance based heterotic grouping, the intra-group hybrids registered a higher frequency of crosses in concurrence with high values of grain yield per plant, specific combining ability effect, mid-parent heterosis, better-parent heterosis and standard heterosis than those of inter-group hybrids. An extensive choice of parents possessing attractive traits constellation would lead to increased yield of the hybrids with much better complementation and thus, needs emphasis together with a substantial hereditary distance for augmentation of yield heterosis.