The main goal of this research is to study the effect of modelling with system dynamics on learning. Specifically, this research studies if using inductive or deductive learning methods applied during modelling with system dynamics has any effect on problem solving skills of students. This research has three other goals: Firstly, the successful application of system dynamics approach in teaching environmental topics. Secondly, helping students to be aware of the environmental problems. Thirdly, helping students to build solution-oriented system dynamics models. An experimental design without control group with pretest/posttest is used in the research. The sample of the research consists of 40 students at 7th grade. Experiment continued an hour per week for the entire semester of 14 weeks. The students in the experiment group 1 developed their models using inductive method. The students in the experiment group 2 developed their models using deductive method. Problem solving skill inventory developed by Heppner and Petersen (1982) was used for data collection. The data collected was analyzed statistically. As part of the statistical analysis, the researcher evaluated the model records developed by students, interviews done with students and observational records of teachers. Statistically significant differences were observed in the problem-solving skills of students in both groups after the experimental study. The increase in the mean scores for problem solving skills of the experimental group 1 was higher than the increase in the mean scores of the students in the experimental group 2. System dynamics approach, which is effective in decision making process, also plays an important role in improving students' problem-solving skills.