The effect of pedigree errors on estimated breeding value and genetic gain for a sex-limited trait with heritability of 0.25 was evaluated. Ten populations of 100,000 milking cows were simulated with correct paternity identification for all animals, and 10 populations were simulated with 10% incorrect paternal identification. The initial populations consisted of 100,000 unrelated individuals, and simulations were continued for 20 yr. The BLUP genetic evaluations were computed every year by an animal model analysis for each complete population. Estimated breeding values for the populations with 10% incorrect paternity were biased, especially in the later generations. Genetic gains were 4.3% higher with correct paternity identification. Reduction of pedigree errors by paternity confirmation of daughters of test sires by DNA microsatellites may result in considerable economic benefits, depending on the cost of testing in each country.