The persistent difficulty students experience in understanding core concepts in physics remains a major concern in higher education, particularly in South-West Nigeria, where conventional teaching approaches often limit deep conceptual understanding. This study investigated Algodoo simulation-enhanced project-based and collaborative learning strategies as a pathway to improving pre-service physics teachers’ problem-solving skills. A quasi-experimental pretest–posttest non-equivalent control group design was adopted. The population comprised 81 physics education students in South-West Nigerian universities, while a sample of 67 students was drawn from three universities, using purposive sampling technique. Two validated instruments: Classroom Observation Protocol for Undergraduate Students and Physics Problem-Solving Test were used for data collection, with reliability coefficients established using Kuder-Richardson statistical technique. The experimental groups were exposed to instruction supported by Algodoo simulations, whereas the control group received conventional lecture-based instruction over a specified period. Data were analysed using descriptive statistics and Analysis of Covariance (ANCOVA). The findings revealed that the groups exposed to Algodoo simulation-enhanced learning demonstrated significantly higher problem-solving skills in physics compared to their counterpart in the control group (p < 0.05). A significant effect of the treatment on learning outcome was also observed. The study concluded that simulation-enhanced teaching strategies foster improved pre-service physics teachers’ problem-solving skills in physics. It is therefore recommended that Algodoo and similar simulation tools be integrated into university teaching, alongside adequate training and technological support for effective implementation.