The use of hybrid eucalypts in commercial forestry has generally resulted from opportunistic crossing events with superior individuals being vegetatively propagated in large numbers. To develop strategies to breed hybrids, it is important to understand the barriers to hybridisation in the genus and as well as the genetic behavior of hybrid populations. Using F1 hybrid populations of E. gunnii × globulus, E. nitens × globulus and outcrossed parental controls we demonstrate, firstly, the importance of environment on hybrid performance and secondly, that high levels of F1 and advanced generation hybrid inviability can occur at an early age, even in crosses between closely related species. Inviable F1 hybrids are a sensitive indicator of genomic incompatibility and add a cost to hybrid selection and production. However, surviving F1’s may be vigorous and of interest to breeders. F1 hybrid populations do not appear to conform to classical quantitative genetic models for growth with inflated estimates of additive genetic variance and poor predictability of hybrid performance. Nevertheless, this does not appear to be so for other more highly heritable traits. Advanced generation hybridisation is one means of overcoming the constraints and costs of poor clonal propagation and F1 hybrid seed production, but hybrid breakdown may substantially reduce genetic gains.