Background: Teachers usually adopt standard methods of teaching including lecture, recitation, and laboratory to educate collaborative problem-solving, critical thinking and creative thinking. Despite advances in technology employers complain that today’s college graduates are sternly deficient in basic skills mainly communication, problem-solving, the ability to prioritize tasks and decision making. The poor performance of students in nursing education may be ascribed to poor teaching strategies and skills. The purpose of this study is to check the effects of two different teaching methods within a simulated setting on the long-term performance of postgraduate nursing students: including lecture-based learning vs. demonstration-based learning in skills lab. Material and Methods: A quasi-experimental two group design was used in this study. The study was conducted on 100 postgraduate nursing students in a private university of Lahore, Pakistan through convenience sampling technique. The data was collected with the help of structured questionnaire. The students of first semester of master of sciences in nursing were selected for study. Normality test and independent t test were applied for the analysis comparison of two groups. Results: This study prospectively investigated the long-term retention of two different skills taught in two different ways. Students with demonstration-based learning scored significantly higher immediately after training than lecture-based learning. In addition, demonstration-based teaching students were more often rated clinically competent at all assessment times. Conclusion: This study shows that within a simulated setting demonstration-based learning is significantly more effective than traditional lecture-based learning assessed immediately after training and at follow-up. The advantages of demonstration-based training are seen especially in long-term retention. Key Words: Demonstration based learning; Lecture based learning, Problem solving, Teaching strategies