This article examines issues encountered over a two-year period by a faculty librarian at the Penn State University Libraries while developing and delivering course-related library instruction employing problem-based learning (PBL) in the First-Year Seminar (FYS) of the Penn State School of Information Sciences and Technology (IST). The process of curriculum development involved close cooperation between the school's instructional designers, faculty, and the libraries' faculty. Findings regarding the practical aspects of delivering information literacy instruction using PBL are discussed, including the issues of transitioning to PBL from more traditional forms of course-related library instruction. The evolution of the instructional goals is expressed in the terminology of the Association of College and Research Libraries (ACRL) "Information Literacy Competency Standards for Higher Education."