The purpose of this study was to determine the effect of inferencing the meaning of new words from context on vocabulary retention by Iranian EFL learners. The participants were 67 Iranian university students of Tehran Islamic Azad University. They were sophomore English translation students who had enrolled in reading comprehension course in two different classes. To assign homogeneity, all students took language proficiency test. One group was assigned randomly as the control group (CG) & the other as experimental (EG). A pretest was administered to ensure that the new words were unfamiliar to them. During the 6 sessions of treatment, 48 selected items were exposed to the control group in the conventional way. (The vocabularies were taught through giving explanation, definition, synonyms or antonyms). But in the experimental group, the students inferred the meanings from the context and wrote down their inferences. Then, the surprised post-test was administered to both groups to evaluate their vocabulary retention. After applying t-test, the results showed that the experimental group did much better on the final test.