Environmental education (EE) has been recognized as a vital tool that could help to alleviate the prevailing environmental and sustainability issues facing our world today. One of the goals of environmental education (EE) has been recognized as the development of environmental literacy (EL). The development of environmental literacy for pre-service teachers (PSTs) is critical if they are to be confident and competent to deliver EE in schools. This study sought to examine the preparedness of PSTs to teach EE in New Zealand primary schools, after completing a compulsory EE paper in their first year of a three-year teacher education programme, in a New Zealand public university. This research is relevant as EE in New Zealand primary schools is recommended to be taught through integration into the core learning areas. This study was conducted using a case study strategy within an interpretive paradigm to seek the meanings of the experiences of PSTs and their learning in the EE paper. Data was gathered from different cohorts of pre-service teachers and their lecturers using a mixed method approach that involved administration of questionnaires, focus group discussions, interviews, observations, and document analysis. The cohorts included Year 1 PSTs taking the paper at the time the research was conducted, Year 3 PSTs looking back on the paper they had previously taken two years ago, and beginning teachers who had recently completed the degree. Quantitative data were analyzed using descriptive and inferential statistics such as t-test, ANOVA, Pearson product moment correlation and path analysis. Statistical Package for the Social Sciences (SPSS) was used to run undertake these tests. The qualitative data were analyzed thematically using content analysis. Findings from this study showed that the EE paper has an immediate impact on PSTs’ EL, especially on their knowledge and concern for issues extensively discussed during the paper. The PSTs also believed that, amongst other experiences or papers taken at the University, the EE paper contributed the most to their EL. However, the EL developed seem to have waned two years after taking the EE paper as indicated by the findings from the Year 3 PST cohort. Upon graduation, at least six months into teaching, experiences of the beginning teachers indicate that school managements’ priorities played a major role in whether EE is implemented into their teaching or not. Other factors identified are issues with approaches for integrating EE into teaching, knowledge of EE, overcrowded curriculum and lack of time, teachers’ interests and a novel factor identified as ‘rituals’. This research highlights the vital role teacher education programmes play in developing EL of PSTs and their preparedness to teach EE in primary schools. It also contributes to an understanding of current issues associated with the challenges of teacher education programmes in achieving the goal of developing environmentally literate teachers. This research concludes that in order to successfully implement EE in New Zealand primary schools, there is the need for amendments to the current EE policies in New Zealand primary schools. Also, teacher education programmes need to modify their curriculum and pedagogical approaches to enhance the development of PSTs’ EL to ensure that teachers are well equipped and confident to teach EE before they begin their teaching career.