A total of 51,161 records of scrotal circumference measurements at 18 mo of age (SC18) and 17,648 records of sperm defects and breeding soundness of Nellore bulls (mean age of 22.5 mo), raised under extensive conditions, were analyzed to estimate coefficients of heritability and genetic correlations of morphological semen traits by Bayesian inference. The observed semen traits were classified as minor (MID), major (MAD), and total sperm defects (TD). The animals were classified according to breeding soundness as satisfactory and unsatisfactory potential breeders. The (co)variance components and breeding values were estimated by Gibbs sampling using the GIBBS2F90 program under an animal model that included contemporary group as fixed effect, age of animal as linear covariate, and direct additive genetic effects as random effects. Heritabilities of 0.40 ± 0.02, 0.16 ± 0.02, 0.04 ± 0.01, 0.15 ± 0.01, and 0.10 ± 0.01 were obtained for SC18, MID, MAD, TD, and breeding soundness, respectively. The SC18 showed a positive and moderate correlation with breeding soundness (0.56 ± 0.04) and a negative and low correlation with MID (-0.23 ± 0.03), MAD (-0.16 ± 0.02), and TD (-0.24 ± 0.02). In conclusion, scrotal circumference showed the best response to selection among the traits studied and was favorably correlated with breeding soundness and sperm morphology in young Nellore bulls.