Increasing seed yield, fatty acids, and essential oil content are the main objectives in breeding coriander. However, in order to achieve this, there is a need to understand the nature of gene action and quantify the heterosis and inbreeding depression. Towards this, six genetically diverse parents, their 15 F1 one-way hybrids, and 15 F2 populations were evaluated under different water treatments. The genetic effects of general (GCA) and specific combining ability (SCA) and their interactions with water treatment were significant for five traits. Water deficit stress decreased all traits in both F1 and F2 generations except for the essential oil content, which was significantly increased due to water deficit stress. Under water deficit stress, a non-additive gene action was predominant in the F1 generation, while an additive gene action was predominant in the F2 generation for all the traits except seed yield under severe water deficit stress. There was a positive high heterosis for the traits examined in some hybrids. Furthermore, in the F2 generation, even after inbreeding depression, some promising populations displayed appropriate mean performance. The results show that the parents used for crossing had a rich, diverse gene pool for the traits studied. Therefore, selection between the individuals of relevant F2 populations could be used to develop high yielding hybrids or superior lines.