Forty accessions of local pepper cultivars in Hunan and 12 combinations of hybrids were analyzed with grey relation grade method. The results indicated that the contents of dry matter, Vc and capsaicin in fruit, resistances to TMV, CMV and anthracnose were more related with the first flower node, plant height, plant spread and branches per plant, etc., but comparatively less related with fruit length, fruit width, weight per fruit, fruit setting number and yield per plant. According to their grey relation grades, some important breeding materials such as Fudijian, Hexinliujiaojiao and Xiangtanwanlajiao were selected from these resources, and excellent hybrid pepper varieties Xiangyan 1, Xiangyan 3, Xiangyan 5, Xiangyan 9 and Xiangyan 10 have been successfully bred from the cross combinations, and all of them have played an important role in pepper breeding and production in the country. It implied that grey relation grade analysis can be used to guide the pepper breeding.