To improve nutritional quality of peanut (Arachis hypogaea L,), it is necessary to know the importance of genetic effects, Epistasis is not considered in most genetic models. In the presence of epistasis, estimates of additive and dominance variation are biased to an unknown extent. This may affect progress of a breeding program by causing inappropriate breeding methods to be chosen. The objectives of this study were to determine the significance of epistasis in inheritance of protein and oil contents and oil quality parameters, and to estimate additive and dominance variances for the traits not influenced by epistasis. Three testers, Chico (L-1), ICGV 86300 (L-2), and their F-1 hybrid (L-3), were each crossed to 15 cultigens, The experiment was conducted in the 1992-1993 postrainy and 1993 rainy environments at the ICRISAT Center, Patancheru, India, Characters studied were protein, oil, eight fatty acid contents, and five derived parameters. The deviations, cultigen x L-1 + cultigen x L-2 - 2 cultigen x L-3, were tested to detect epistasis, Environment interacted more strongly with epistatic gene action than with additive or dominant gene action, Epistasis affected the expression of 11 traits in both environments. The additive x additive epistasis was detected for oleic acid in both environments. Additive gene action was detected for eicosenoic and polyunsaturated/saturated fatty acids (P/S) ratio in the rainy environ ment, Dominant gene action was detected for P/S in the rainy and for eicosenoic in both environments indicating incomplete dominance for these traits.