Social loafing refers to the behaviour of individual members of a team who have tendency not to work as hard as they could or should, because social groups provide a degree of anonymity such that individual team members feel that their poor performance will be hidden by the overall output of the team. Agile Software Development philosophy espouses the importance of cohesive project teams, the empowerment of these teams, and the collective ownership of the code produced by the team — social values similar to those of communities of practice. This paper posits that one of the unintended consequences of Agile Software Development is that it may give rise to social loafing, under certain conditions. In order to test this proposition, research was carried out on two software development teams over an eight month period to determine if the values inherent in Agile Software Development could give rise to social loafing The theoretical assumption adopted by the authors was that the project team which fully adopted the agile approach would exhibit a greater tendency for social loafing, in comparison to the other team. The findings of the study indicate, however, that the opposite was the case; accordingly, the study’s findings are interpreted to offer an explanation for this apparent paradox.