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The accumulation of inbreeding and the loss of genetic diversity is a potential problem in the modern dairy cattle breeds. Therefore, the purpose of this study was to analyze the pedigrees of Canadian Holstein and Jersey cattle to estimate the past and current rates of inbreeding and genetic diversity, and to identify the main causes of diversity loss. Completeness and depth of the pedigrees were good for both breeds. For Holsteins, the average rates of inbreeding per generation showed a decreasing trend in recent years when compared with the 1990s. The estimated current effective population size was about 115 for Holsteins and is not expected to significantly change in the near future if generation intervals stay at current value, as rates of increase in inbreeding and coancestry showed decreasing trends. For Jerseys, the estimated effective population size was about 55 and it is expected to decrease in the near future due to the observed increasing rates of coancestry and inbreeding. Ancestors with the highest marginal genetic contributions to the gene pool in current years and with the highest contributions to inbreeding were identified. The 2 most heavily used and represented ancestors in the Holstein pedigree (i.e., Round Oak Rag Apple Elevation and his son Hanoverhill Starbuck), accounted for 30% of inbreeding. Analyses revealed that the most important cause of genetic diversity loss in both breeds was genetic drift accumulated over nonfounder generations, which occurred due to small effective population size. Therefore, a need exists in both breeds, particularly in Jerseys, for managing selection and mating decisions to control future coancestry and inbreeding, which would lead to better handling of the effective population size.