The use of simulated patients is a developing instructional strategy in physical therapy education (PTE) programs. However, it is unknown if using simulated patients during instruction yields better outcomes than the traditional use of peer role-play. This two-arm randomized, experimental design investigated the effect of type of simulation-based instruction, simulated patients compared to peer role-play, on clinical reasoning and confidence of students enrolled in an entry-level PTE program learning patient transfer skills. Upon the conclusion of two instructional sessions, clinical reasoning was measured by the Think Aloud Standardized Patient Examination (TASPE) during a simulation experience. Student confidence in performing future acute care skills was measured by the Acute Care Confidence Survey (ACCS) following the simulation experience. Two independent-samples t-test demonstrated that there was not a statistically significant difference in the students' TASPE scores or the ACCS scores based on the type of simulation-based instruction. This study provides evidence that peer role-play can be just as effective in improving physical therapist student clinical reasoning and confidence outcomes compared to using simulated patients when instructing patient transfer skills. Although the use of simulated patients may appear to promote deeper learning by portraying a more real scenario for practicing patient care skills, it is no more advantageous than peer role-play in terms of physical therapist students' clinical reasoning and confidence skills when learning patient transfer skills.