This quasi-experimental study aimed to determine the effects of inquiry-based approach in formal and informal setting on the physics problem performance of marine engineering students. This study tried to ascertain whether the inquiry-based approach in informal setting has more significant influence on the physics performance of the students over the formal setting. Eighty-eight marine engineering students were utilized in the study. They were divided into two intact groups and were matched-paired according to their math grades last first semester AY 2013-2014. A teacher-made test duly validated by the expert was used as pretest and posttest to measure their physics problem solving performance. The study showed that both groups show very low level of physics performance in word problem solving while low level in the practical problem solving before they were exposed to inquiry-based approach, the students both in formal and informal settings demonstrated low level of physics performance in word problem solving while average in practical problem solving. A not significant result in the word and practical problem solving was found before students were exposed to inquiry-based approach both in formal and informal settings. The same result in the word and practical problem solving performance of students was found after the intervention. On the other hand, the pretest-posttest mean scores of students showed significant difference in the practical problem solving in both formal and informal settings, however a not significant result was found only in the word problem solving performance of the students in formal setting. Furthermore, a not significant result also existed in the mean gain scores between formal and informal setting in word and practical problem solving. This simply implies that students' performance in formal setting is the same as those students taught in informal setting, thus, both can be used as instructional strategies in teaching physics to enhance word and practical problem solving performance of students in physics.