It has been demonstrated experimentally that recognition of novel items is more accurate than recognition of previously familiarized items. Tulving and Kroll (1995) proposed that this effect is due to novelty detectors in the brain giving processing priority to novel information. Recently, Dobbins et al. (1998) suggested that the effect is due to source discrimination problems. In the present two experiments attempts were made to facilitate source discrimination by having different orienting tasks and materials in the familiarization and in the critical presentations. Degree of familiarization was manipulated by varying number of presentations one, two or three times. The results in Experiment 1 showed that the novelty effect increased linearly as a function of presentations in the familiarization phase. In the second experiment the difference between familiar and novel items was even more pronounced. Enactment at encoding was added as a manipulation during familiarization. The results of Experiment 2 showed that the novelty effect did increase linearly for items with nonenacted encoding (in which the familiarization and the critical phase were more similar) but not for enacted encoding. All subjects reported experiencing source discrimination difficulties in both experiments despite the measures taken to diminish them. It seems safe to conclude that source discrimination difficulties are a part of the novelty effect.