A genetic model with either 64 or 1,600 unlinked biallelic loci and complete dominance was used to study prediction of additive and dominance effects in selected or unselected populations with inbreeding. For each locus the initial frequency of the favourable allele was 0.2, 0.5, or 0.8 in different alternatives, while the initial narrow-sense heritability was fixed at 0.30. A population of size 40 (20 males and 20 females) was simulated 1,000 times for five generations. In each generation 5 males and 10 or 20 females were mated, with each mating producing four or two offspring, respectively. Breeding individuals were selected randomly, on own phenotypic performance or such yielding increased inbreeding levels in subsequent generations. A statistical model containing individual additive and dominance effects but ignoring changes in mean and genetic covariances associated with dominance due to inbreeding resulted in significantly biased predictions of both effects in generations with inbreeding. Bias, assessed as the average difference between predicted and simulated genetic effects in each generation, increased almost linearly with the inbreeding coefficient. In a second statistical model the average effect of inbreeding on the mean was accounted for by a regression of phenotypic value on the inbreeding coefficient. The total dominance effect of an individual in that case was the sum of the average effect of inbreeding and an individual effect of dominance. Despite a high mean inbreeding coefficient (up to 0.35), predictions of additive and dominance effects obtained with this model were empirically unbiased for each initial frequency in the absence of selection and 64 unlinked loci. With phenotypic selection of 5 males and only 10 females in each generation and 64 loci, however, predictions of additive and dominance effects were significantly biased. Observed biases disappeared with 1,600 loci for allelic frequencies at 0.2 and 0.5. Bias was due to a considerable change in allelic frequency with phenotypic selection. Ignoring both the covariance between additive and dominance effects with inbreeding and the change in dominance variance due to inbreeding did not significantly bias prediction of additive and dominance effects in selected or unselected populations with inbreeding.