The present study investigates the correlation between language proficiency, collocations and the role of L1 transfer with collocations. This is a quantitative research. The research places more emphases on collecting data in the form of numbers. It is also experimental research in the sense that it tests participants to measure their variables. The participants of the study were 57 Persian B.A students, both male and female from Islamic Azad University of Bandar Abbas, Iran. The results showed that there is a significant relationship between Iranian subjects’ language proficiency, as measured by the Michigan proficiency test and their knowledge of collocations, as measured by their performance on a collocation test designed for the current study. The results obtained from the research indicate that Iranian EFL learners are more likely to use the right collocation in cases of L1 transfer. This suggests that positive transfer plays a major role when it comes to EFL learners’ ability to produce the right collocations in their L2. The findings of this study have some implications for language teaching. Teachers can put emphasis on the inclusion of selected grammatical and lexical collocations in reading comprehension passages.