Background: Genomic selection has increased genetic gain in dairy cattle, but in some cases it has resulted in higher inbreeding rates. Therefore, there is need for research on efficient management of inbreeding in genomically-selected dairy cattle populations, especially for local breeds with a small population size. Optimum contribution selection (OCS) minimizes the increase in average kinship while it maximizes genetic gain. However, there is no consensus on how to construct the kinship matrix used for OCS and whether it should be based on pedigree or genomic information. VanRaden’s method 1 (VR1) is a genomic relationship matrix in which centered genotype scores are scaled with the sum of 2p(1-p) where p is the reference allele frequency at each locus, and VanRaden’s method 2 (VR2) scales each locus with 2p(1-p), thereby giving greater weight to loci with a low minor allele frequency. We compared the effects of nine kinship matrices on genetic gain, kinship, inbreeding, genetic diversity, and minor allele frequency when applying OCS in a simulated small dairy cattle population. We used VR1 and VR2, each using base animals, all genotyped animals, and the current generation of animals to compute reference allele frequencies. We also set the reference allele frequencies to 0.5 for VR1 and the pedigree-based relationship matrix. We constrained OCS to select a fixed number of sires per generation for all scenarios. Efficiency of the different matrices were compared by calculating the rate of genetic gain for a given rate of increase in average kinship. Results: We found that: (i) genomic relationships were more efficient than pedigree-based relationships at managing inbreeding, (ii) reference allele frequencies computed from base animals were more efficient compared to reference allele frequencies computed from recent animals, and (iii) VR1 was slightly more efficient than VR2, but the difference was not statistically significant. Conclusions: Using genomic relationships for OCS realizes more genetic gain for a given amount of kinship and inbreeding than using pedigree relationships when the number of sires is fixed. For a small genomic dairy cattle breeding program, we recommend that the implementation of OCS uses VR1 with reference allele frequencies estimated either from base animals or old genotyped animals.