Assessment steers students' learning is a statement that has been used repeatedly without solid evidence in the literature. This manuscript aims to evaluate the published literatures on the effect of teaching learning environment in particular, the implemented assessment on students' learning approaches. A literature review was performed on the effect of assessment on students learning approaches. English language literatures were searched in Pubmed, PsycINFO, and Medline without restriction to type or date of publication. Reviewing the literature, the most prominent identified theme was assessment function characterized in summative and formative assessment and general effect of assessment on students' learning approaches. The literature review has pointed clearly to the complexity of the relationship between learning environment, students' perceptions of assessment demands, and students' approaches to learning. Many factors (extrinsic and intrinsic) were theoretically proposed to mediate students' approaches to learning in response to their assessment. However, few of these factors were researched in the published literature. Formative assessment is likely to contribute to students' deep approach to learning while summative is likely to contribute to their surface approach. However, these effects are not definite and further research about the complex relationship between assessment and students' learning is required.