Test day records of first lactation Holstein cows from 1996 to 2008 were obtained from Animal Breeding Center of Iran and used in this research. Data consisted of 872125 test-day milk records of 95816 cows from 59 herds. (Co)Variance components and genetic parameters were estimated using random regression model via Gibbs sampling method. Two order Legendre polynomials and third coefficient of Wilmink function were used to describe the lactation curve in genetic and permanent environment levels. The heterogeneity of the residual variance in days 5 to 365 of lactation was modeled using a number of thirty six 10-day intervals. Residual variance was high at the beginning but it was steady and decreased slowly to the end of the lactation. Permanent environmental variance was high at the extremes. The total variance and heritability were affected by the pattern of PE variance. The lowest and highest genetic variances occurred at the beginning and at the end of lactation, respectively. Heritability estimates for daily yields were low in the early lactation and generally ranged from 0.077 to 0.252 for days 5 and 305, respectively. High residual and permanent variances and lower genetic variance were lead to low heritability at the first part of lactation. Genetic correlations were positive and higher than phenotypic ones for all the days in lactation. The lowest genetic correlation was 0.35, between the extremes. Genetic correlations between daily yields decreased with increase in interval between tests. The estimated parameters in this study can be used to predict breeding values for Holstein dairy cattle of Iran.