The experiment was conducted at experimental sites of Adet Agricultural Research Center namely Finoteselam, Adet, Simada, Jnjibara and Debretabor in 2014 cropping season under rain fed condition. In Ethiopia, although there are recently released and better performing bread wheat varieties, Western Amhara Region farmers grow relatively older varieties. The objectives of the experiment were to evaluate the nature and extent of genotype by environment interaction in grain yield and to examine yield stability of varieties in western Amhara region. Twelve bread wheat varieties were used as experimental treatments. The varieties were laid out in randomized complete block design with three replications per site. The analysis of variance showed highly significant differences among genotypes across environments (P-::..0.01). Ga'ambo (G4) depicted higher grain yield and stem, stripe and leaf rust resistance, whereas Kubsa (G 12) showed a lowest grain yield and susceptible for stem, stripe and leaf rust in all environments. Ogolcho and Tsehay also showed a higher grain yield at most environment except at Injibara, and rust resistant except stripe rust at Simada. Some bread wheat genotypes such as Kubsa and Gassay have lost high yielding and rust resistance potential. Kubsa, Hidase, Huluka and Gassay should not be used for production over the tested environment. Shorima and Danda 'a in all locations except Finoteselam, and Tay in all locations except Simada could be recommended for production. Environments E3 and E4 were showed close similarity, while E2 was quite different from the tested environments. Bread wheat breeders should be focused not only on yield and yield related traits, but also on disease resistance improvements. Molecular study will also be needed to identify high yielding, rust resistance QTLs or genes and to improve the durability of rust disease resistance by introgressing multiple resistance genes into elite bread wheat genotypes.