Previous studies have reported contradictory findings regarding the effects of item repetition on the subsequent encoding of contextual details associated with items (i.e., source memory). Whereas some studies reported repetition-induced enhancement in source memory, other studies observed repetition-induced impairment. To resolve these conflicting results, we examined the modulatory role of pre-experimental stimulus familiarity in the relationship between item repetition and new source memory formation by orthogonally manipulating pre-experimental stimulus familiarity and intra-experimental item repetition. In a series of experiments consisting of three phases (item repetition, item-source association, and source memory test), we found that item repetition impaired source memory for pre-experimentally familiar items (famous faces or words), whereas the same manipulation improved source memory for pre-experimentally novel items (non-famous faces or pseudowords). Crucially, item repetition impaired, rather than improved, source memory for pre-experimentally novel items when these items had been pre-exposed to participants prior to the three-phase procedure. Collectively, these findings provide strong evidence that pre-experimental stimulus familiarity determines the relative costs and benefits of experimental item repetition on the encoding of new item-source associations. By demonstrating the interaction between different types of stimulus familiarity, the present findings advance our understanding of how prior experience affects the formation of new episodic memories. [Citation: Lee, H., Kim, K., & Yi, D-J. (in press). Pre-experimental stimulus familiarity modulates the effects of item repetition on source memory. Journal of Experimental Psychology: Learning, Memory, and Cognition.]