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Hip dysplasia records from 10, 335 German shepherd dogs were used to estimate environmental effects and predict breeding values and genetic change achieved with the Finnish Kennel Club's breeding programme. The best linear unbiased prediction (BLUP) procedure was used for the analysis. No clear genetic improvement could be found during the study period (1985 to 1997). This might be due to ineffective selection for good hips. Significant environmental effects included year and month of birth, panellist, screening age and the effect of the genetic group of offspring from imported versus non-imported sires. In order to make the breeding programme more effective, BLUP breeding values should be used instead of phenotypic selection.