This study investigated the relationship between problem familiarity and students' learning in a problem-based course. Problem familiarity in this study refers to the extent to which a problem fits with students' prior knowledge and experiences. As part of regular course work, 172 students were given two problems on different occasions. These problems varied in the extent of problem familiarity. Students' report of their learning activities and tutor's assessment of the students' learning were collected at the end of the problems. Results showed that both the students and tutors found the familiar problem to be better for learning. However, some elements of unfamiliarity may not be all that bad. For instance, unfamiliarity may result in more questioning, thinking and reasoning. However, this did not contribute to significant difference in terms of overall critical reasoning. Results also indicated a need to closely examine students' critical reasoning (in terms of evaluating multiple perspectives) and students' collaborative learning (in terms of brainstorming and discussion) when given familiar/unfamiliar problems.