This study set out to empirically determine the reliability and validity of the Vocabulary Levels Tests, both the passive and productive versions. Furthermore, attempt was made to investigate the nature of the students' vocabulary knowledge with regard to their passive and active knowledge of the L2 words as a whole and at different word frequency levels. Moreover, the relationships between these two types of vocabulary knowledge and the learners' proficiency level and reading comprehension ability were studied. And finally, it was scrutinized if there were any significant differences between the High and Low proficient learners and also English majors and non-majors' passive and active vocabularies. Three tests, the Vocabulary Levels Test, the Productive Version of the Vocabulary Levels Test, and a TOEFL test, were administered to a group of 76 Iranian undergraduate students majoring in engineering and English Language and Literature. The results proved the Vocabulary Levels Tests to be reliable and valid tests of vocabulary size. The learners' passive and active vocabularies were also found to be highly correlated as a whole and at each separate word-frequency level. Passive vocabulary was always larger than active vocabulary at all levels; however, the gap between the two increased at lower word-frequency levels. In addition, there was a high correlation between the learners' vocabulary knowledge on the one hand and proficiency and reading comprehension ability on the other hand. It was also found that there was a statistically significant difference between the vocabulary knowledge of High proficient and Low proficient groups and also between the English majors and non-majors. The High proficient group and the English majors had greater passive and active vocabulary knowledge than their corresponding Low proficient group and the non-majors.