A major problem in smallholder Nile tilapia (Oreochromis niloticus) farms is that the achieved production is much lower than under optimal management. One of the main environmental factors contributing to lower production is dissolved oxygen (DO), because the majority of Nile tilapia production takes place under smallholder farms with no aeration of ponds which leads to large DO fluctuations. On the contrary, breeding programs select fish in aerated ponds. Aerating ponds is currently not an option for smallholder farmers because either it is too expensive or they lack access to cheap electricity supply. Therefore, it is crucial to know the genetic correlation between aerated and non-aerated ponds to optimize breeding programs to select fish that perform well in ponds with fluctuating DO levels. The objectives of this study were 1) to investigate the presence of genotype by environment (GxE) interaction between aerated and non-aerated earthen ponds using a design that minimized common environmental effects and 2) the impact of (non-)aeration on genetic parameters. The experimental fish were mass-produced using natural group spawning and nursed in four 30m2 hapas. A random sample of fingerlings from each hapa was tagged and randomly distributed to aerated and non-aerated ponds for a grow-out period of 217 and 218 days. Body weight and photographs were taken on five consecutive time points during grow-out. Of the stocked fish, 2063 were genotyped-by-sequencing. A genomic relationship matrix was built using 11,929 SNPs to estimate genetic parameters with ASReml. No-aeration significantly reduced mean harvest weight (HW), survival and thermal growth coefficient (TGC) compared to aeration. Substantial heritabilities (0.14–0.45) were found for HW, TGC, surface area (SA) and body shape, expressed as ellipticity, and low heritabilities (0.03–0.04) for survival in aerated and non-aerated ponds. In both ponds, the environmental effect common to full sibs was not significant. Genetic coefficients of variation were 20–23% lower and heritabilities were 19–25% lower in the non-aerated pond compared to the aerated pond, for HW, TGC and survival. Genetic correlations between ponds for HW, standard length, height, SA and TGC were 0.81, 0.80, 0.74, 0.78 and 0.78, respectively. In summary, some GxE interaction between aerated and non-aerated ponds was found and no-aeration decreased genetic coefficients of variation and heritabilities compared to aerated ponds. Breeding programs are recommended to use half sib information from non-aerated farms or to set up a reference population for genomic selection in a non-aerated environment either on-station or in farms.