The present study examines Saudi ESL learner perception of three syllable-final English nasal contrasts: /m/-/n/, /m/-/©¯/, and /n/-/©¯/. It was based primarily on two models, the Perceptual Assimilation Model (PAM) and the Speech Learning Model (SLM), in order to determine how Saudi ESL learners categorized nasal segments in their L2, English. In addition, other models, including the Markedness Differential Hypothesis (MDH), contributed in finding the most difficult contrast. The participants, consisting of 24 Saudis studying in the US, were asked to distinguish between 40 English monosyllabic words grouped into minimal pairs. Regardless of their length of exposure, participants had greater difficulty in categorizing /n/ and /©¯/ as separate phonemes, dealing with these sounds as a Single Category (SC). The /n/-/m/ contrast had the fewest errors among participants with more exposure in the US, who were able to distinguish between the word pairs in this contrast, while those with less exposure had more difficulty in distinguishing /n/ from /m/. This fact shows that the participants, especially after receiving more exposure, were able to categorize the /n/ and /m/ as a Two Category (TC). The contrast /m/-/©¯/ had a number of errors somewhat similar to that found with the /n/-/m/ contrast. Therefore, participants in early stages of learning encountered more difficulties in categorizing /m/ and /©¯/ than those who had spent a longer period of time in the US. This study concluded that the categorization between Arabic and English phonemes was highly important in learning English as an L2. Therefore, the absence of the English nasal /©¯/ from the Arabic phonemic inventory caused difficulties for Saudi ESL learners to categorize /©¯/ as a separate phoneme. Additionally, markedness also played a role since the velar nasal /©¯/ is typologically more marked than /n/ and /m/ making it more difficult to acquire in early stages of L2 learning.