In this study we investigate how prior knowledge influences knowledge development during collaborative discovery learning. Fifteen dyads of students (pre-university education, 15-16 years old) worked on a discovery learning task in the physics field of kinematics. The (face-to-face) communication between students was recorded and the interaction with the environment was logged. Based on students' individual judgments of the truth-value and "testability" of a series of domain-specific propositions, a detailed description of the "knowledge configuration" for each dyad was created before they entered the learning environment. Qualitative analyses of two dialogues illustrated that prior knowledge influences the discovery learning processes, and knowledge development in a pair of students. Assessments of student and dyad definitional (domain-specific) knowledge, generic (mathematical and graph) knowledge, and generic (discovery) skills were related to the students' dialogue in different discovery learning processes. Results show that a high level of definitional prior knowledge is positively related to the proportion of communication regarding the interpretation of results. Heterogeneity with respect to generic prior knowledge was positively related to the number of utterances made in the discovery process categories "hypotheses generation" and "experimentation." Results of the qualitative analyses indicated that collaboration between extremely heterogeneous dyads is difficult when the high achiever is not willing to scaffold information and work in the low achiever's zone of proximal development.