Background: Computer-based examination (CBE) has become increasingly popular as a testing modality in underand postgraduate health sciences education. Since 2013, Prince Sultan military college of health sciences (PSMCHS) has utilized CBE to conduct the preparatory year examination in first year assessments with multiple choice questions, column matching, and the modified essay question paper. Aims: To evaluate the test anxiety levels among students during computer-based and traditional paper-and-pen examination. Settings and Design: The descriptive survey based study was conducted in PSMCHS. Methods and Material: A sample of 199 male and female students of the preparatory year of allied health sciences was selected by random sampling technique. Test anxiety was quantified by using Westside anxiety scale. Statistical analysis: Descriptive statistics were used to analyze data. Mean anxiety scores were compared by unpaired t-test. Results: Of 199 students, 109 (54.8%) and 89 (45.2%) were males and females. A statistically significant decrease in mean anxiety score on WTA scales was observed in students administered with computer-based examination when compared with pen-and-paper based examination (2.48 vs. 3.90; P<0.05). The mean level of anxiety in paper and pen examination among male and female students was 3.77 and 4.04, respectively. There was more mean examination anxiety in females as compared to male students. Conclusions: There is a strong relationship between test anxiety and paper-and-pen exam. It is suggested that to reduce the students test anxiety to improve the technological awareness and utilization of computer-based examination at the preparatory level for both the teachers and the students.