Optimal outbreeding theory predicts fitness benefits to intermediate levels of inbreeding. In the present study, we test for linear (consistent with inbreeding depression) and nonlinear (consistent with optimal outbreeding) effects of inbreeding on reproductive fitness in male and female Drosophila melanogaster. We found linear declines in fitness associated with increased inbreeding for egg-to-adult viability, but not the number of eggs laid or sperm competitive ability. Egg-to-adult viability was also lower in the progeny of inbred males and females mated to unrelated individuals. However, there was no evidence for optimal fitness at intermediate levels of inbreeding for any trait. The present study highlights the importance of considering biologically realistic levels of inbreeding and cross-generational effects when investigating the costs and benefits of mating with relatives. © 2009 The Linnean Society of London, Biological Journal of the Linnean Society, 2009, 98, 501–510.