Many organizations are making a deliberate effort to use teams to carry out work as an alternative to more traditional, hierarchical approaches to defining jobs or supervising employees. The authors posit that structure and composition of work teams are likely to systematically affect group dynamics of such teams. Using the related frameworks of social identification theory and embedded intergroup relations theory, they examine the proposition that greater diversity of team member characteristics and larger team size negatively affect members' perceptions of team integration. Hypotheses were tested on 1,004 individuals working on 105 interdisciplinary treatment teams in a national sample of 29 Department of Veterans Affairs psychiatric hospitals. Five of six hypotheses received support for at least one of three dimensions of team integration examined in this article. The strongest support was found for the effects of diversity on perceptions of team functioning. Results are generally consistent with the basic premise of the embedded intergroup relations model: As teams become more diverse along most identity group and organizational group characteristics, intergroup relations among team members suffer and perceived level of team integration declines. The authors offer several suggestions about how managers and team leaders might use these findings to improve team integration.