Genetic diversity is considered as one of the criteria for the selection of parents for hybrid breeding. The present study was undertaken to evaluate genetic divergence among seven pepper cultivars and to assess the relationship between heterosis and parental genetic distance. Twenty-one F1 hybrids and seven parents were evaluated for 15 morphological characters in a greenhouse and in the field. The parents were examined for DNA polymorphisms using six amplified fragment length polymorphism (AFLP) primer combinations. Cluster analysis using two genetic distance measures grouped the seven parents differently. Mid-parent and high-parent heterosis was observed for most characters. Most hybrids outperformed the parental lines for fruit yield, earliness and plant height. Morphological and AFLP-based distance measurements were efficient enough to allocate pepper genotypes into heterotic groups. The correlations of morphological distances with mid-parent heterosis were significant for days to flowering and maturity, suggesting earliness can be predicted from morphological distances of parental lines. However, the correlations of AFLP-measured genetic distances with mid- and high-parent heterosis were non-significant for all characters, except for fruit diameter, and proved to be of no predictive value.