the skill of reading in english as a foreign language is an important and challenging one which is affected both by linguistic and extra linguistic factors. since vocabularies are part and parcel of every reading comprehension text, knowing enough vocabulary always facilitates this process. however, guessing strategy as one of the most important strategies has consistently ignored by language learners and teachers in iran. this study examines the impact of topic familiarity on lexical inferencing (guessing) of iranian efl learners. a repeated-measures design was used with a cross-sectional sample of 30 adult l2 learners of english. students read narratives (one more familiar and one less familiar) containing nonsense words in a translation production test. they were instructed to guess the meaning of nonsense words and write down their persian translation. the nonsense words were constructed according to orthography and morphological rules of english. this was followed by a multiple choice recognition test (here referred to as retention test) of the same words one week later. students were required to recognize meanings of target words in retention test. the analyses of the data revealed (a) robust effects of topic familiarity and lexical guessing, (b) a significant relationship between topic familiarity on lexical retention–recognition measure.