This study explored the students' perceptions and key learning outcomes with the use of system modelling (SM) instructional strategy. Specifically, the study sought to understand students' perceptions and experiences with the use of SM in enhancing their conceptual and application knowledge, as well as problem‐solving and system thinking skills. The study employed a qualitative inquiry approach to gain insight into engineering students' experiences. Data were collected using semi‐structured interviews and students' artefacts, including problem‐solving surveys and modelling diagrams. Overall, the findings indicated promising effects of the SM approach on students' learning outcomes. Seven major themes emerged from the interview data, including problem diagnosis, interconnection, linearity, external representation, wholeness, organized problem‐solving approach and systematic process. The problem‐solving inventory survey responses indicated that participants believed that the SM approach enhanced their problem‐solving skills. Furthermore, the model diagram analysis suggested that all participants showed moderate gain in system thinking skills after the SM strategy. This paper presents these findings and the pedagogical implications for engineering education.