This paper aims at analyzing two Arabic translations of the novella The Old Man and the Sea by Ernest Hemingway 1952. One of the translations is by Dar Al-Bihar, Beirut, and the other is by Ziad Zakaria. The purpose of this study is to investigate problems and strategies of literary translation into Arabic and to suggest guidelines for better practices in the field of Arabic literary translation. This study is important because Arabic literary translation problems and strategies have been rarely tackled by researchers. Analysis of the translations is based on Baker's theory of equivalence. Two levels of equivalence are taken into consideration in this paper: equivalence at word level and equivalence at collocation level. The last part of the paper is devoted to investigate the cultural implications of Qur'anic expressions used in Zakaria's translation. The qualitative method has been used in compiling, analyzing and discussing data. Data has been collected, classified, and scrutinized in light of the theoretical background of the research. The findings show that the best translation should consider both contextual factors and cultural factors in SL and TL. Besides, naturalness and readability of the target text is crucial in literary translation. Untranslatable cultural specific items can be tackled in various ways such as paraphrasing, rewording, lexicalizing new concepts, and adapting them culturally as Zakaria has demonstrated in adding Quranic expressions in his translation of Hemingway. The researcher encourages creativity in literary translation provided that translators have literary competence and refined taste for style.