The pseudoword effect is the finding that pseudowords (i.e., rare words or pronounceable nonwords) give rise to more hits and false alarms than words. Using the retrieving effectively from memory (REM) model of recognition memory, we tested a familiarity-based account of the pseudoword effect: Specifically, the pseudoword effect arises because pseudowords lack distinctive semantic meanings. Because semantics can differentiate orthographically similar words (e.g., "horse" vs. "house"), by lacking distinctive semantics, pseudowords have greater interitem similarity than words, and hence more familiarity, which gives rise to the pseudoword effect. Across two sets of simulations, we demonstrate that this account explains the pseudoword effect in addition to accounting for why the pseudoword effect is absent when irregular nonwords are compared with words. Furthermore, our modeling efforts suggest a novel experiment that leads us to the discovery of a new concordant effect. Namely, extremely high-frequency words behave like pseudowords (giving rise to more hits and false alarms than high-frequency words) and also have less distinctive semantics than high-frequency words. We conclude that our work provides strong evidence in favor of the familiarity-based accounts of the pseudoword effect. We discuss the implications of our research with regard to various issues surrounding the pseudoword effect and REM model. (Contains 4 figures and 4 footnotes.)