4 Abstract: Twenty bread wheat genotypes and two checks were evaluated at six test locations of Central and South Eastern Ethiopia 2013/1014 during main growing season in a randomized complete block design using four replications. The objective of the study was to quantify the magnitude of genotype by environment interaction and yield stability of bread wheat genotypes. The additive main effect and multiplicative interaction effect model (AMMI) analysis revealed significant difference at (P=0.01) for genotype, location and genotype by location interaction for the response variable grain yield. Accordingly, the first and second IPCAs share 60.77 and 15.70% of the G x E SS captures 20.68 %.The AMMI model clearly indicate the genotype by environment interaction by partitioning into three significant component taking 89.70% of genotype by environment variation 20.68% of the variation in the genotype by environment interaction. According to the Stability analysis of the additive main effect and multiplicative interaction, biplot analysis ranking biplot the genotype Digelu and ETBW6738 were the most stable coupled with higher grain yield where as the genotypes Danda'a and ETBW6732 were unstable.in each tested location. Based on the AMMI, environments were highly variable both for main and interaction effects. Bokoji, Kulumsa, Sinana, Holeta and Asassa were favorable environments. Areka as low yielding (unfavorable) environments for majority of the traits. In general, the results of the analysis showed that bread wheat is highly sensitive to environmental changes and this necessitates screening of cultivars for wide and specific adaptation. Based the one year data the genotype Digelu were stable accompanied with higher yield but in order to recommended appropriate genotypes to the south Eastern Ethiopia, repeating the trial is vital.