To determine the efficiency of photosystem ΙΙ inheritance and its relationships with terminal drought tolerance in bread wheat, an experiment was carried out during 2006- 2008 at Ardebil Islamic Azad University. Heritability of traits was estimated by using an 8×8 diallel cross in greenhouse. To evaluate the relationships between traits, 18 wheat varieties were grown in RCBD with three replications, both under normal and terminal drought conditions, in the field. Chlorophyll flourescens parameters and drought tolerance indices were then mesured. Based on the results, it was found that in general, additive-dominance model was effective in determining inheritance of all of the parameters. Results also revealed that dominance effects are more important than additive effects. It was also found that all of the parameters are under control of overdominance and consequently had relatively low narrow sense heritability. However, the broad sense heritabilities of traits were very high. It was also observed that F0 and Fm had in general non-significant correlations with drought tolerance. However, Fv/Fm index showed relatively positive correlations with drought tolerance. Due to high broadsense heritabilities of traits, their significant correlations with drought tolerance, rapidity, less expensiveness and non destructivity of chlorophyll fluorescence measurement, it max be concluded that Fv/Fm index can be a complementary criterion for selection of drought tolerant genotypes.