This study aims at investigating the challenges that Yemeni translation students encounter when translating neologisms from English into Arabic. It also aims at comparing students' translation with outcomes of machine translation (MT). The authors follow the descriptive and comparative methods in conducting this study. To achieve the objective of the study, a test consisted of 24 items was designed to uncover such difficulties and was given to 55 translation students. The same test was applied on three translation applications for comparing the performance of students with MT. The findings show that translating neologisms accurately is hard for most of the Yemeni translation students and also for machine translation as well. It is difficult for them to understand English neologisms or to find the Arabic equivalents for English neologisms. The finding also indicates that only a few translation students can achieve accurate translation. Meanwhile, Translation applications produced poor translation and could not able to achieve accurate translation for most types of neologisms. As a result of the comparison, students produced acceptable translation better than MT. The difficulties are lexical related to the twelve types of neologisms based on Newmark classification (1988).