Wheat is one of the most important cereal crop in Ethiopia, ranking third in totalrnproduction next to maize and teff. Wheat covers a total arable land of 110,434 ha withrnaverage productivity of about 8.4 qt /ha, which is below the national production averagern(14.4 qt /ha). The objective of this research was to study the genetic dissimilarity amongrntwenty bread wheat genotypes. The study is made based on twenty bread wheat genotypesrnwhich was obtained in 2007 and 2008 from trials conducted by the Ethiopian Institute ofrnAgricultural Research (EIAR) and were evaluated for their diversity to estimate therngenetic divergence and clustering them into homoGenous groups for the hybridizationrnprogram in 8 environments using Mahalanobis D2 statistic. The D2 value data can bernused in cluster analysis to identify groups of related cultivars. Using UPGMA clusteringrntechnique all the Geno types were grouped into six cluster on the basis of D2 value usingrnTocher's optimization technique. The intra- and inter-cluster D2 values suggested thatrnwithin cluster genetic diversity is narrow, but the genetic diversity among clusters isrngreater. Therefore, The presence of significant genetic variability among the evaluatedrnbread wheat genotypes suggests an opportunity for improvement of grain yield throughrnhybridization of genotypes from different clusters and subsequent selection from thernsegregating generations would broaden the genetic base of bread wheat breedingrnpopulations. Thus, those analysis based on multivariate methods using D2 statistic isrnuseful in providing information for more efficient variety development programmes.