The validity effect is the increase in perceived validity of repeated statements. In the first experiment, subjects rated repeated and nonrepeated statements for validity, familiarity, and source recognition. Validity and familiarity were enhanced by repetition, but source dissociation was not. A path analysis suggested that familiarity mediates perceived validity. In Experiment 2, statements presented in a natural setting were later rated for perceived validity, familiarity, and source recognition. Repetition had parallel effects on validity and familiarity ratings, but source dissociation was unaffected. Controlling for familiarity statistically eliminated the validity effect. In Experiment 3, the effect of prior knowledge on validity judgments was studied. Subjects rated the validity of statements that were related or unrelated to their field of expertise. Those most knowledgeable about the topic were most likely to exhibit the validity effect. Overall, the results suggest that familiarity is the basis of judged validity.