An organization’s absorptive capacity, or its ability to acquire and use knowledge, is important for facilitating innovation that can lead to improvements in organizational performance. We examine the effects of absorptive capacity on open source software development group performance. Specifically, in addition to the commonly noted importance of OSS developers, the role of the Internet-based user community is introduced as fundamental in developing absorptive capacity for open source software development projects. We suggest that the Internet-based user community and the development group enhance the open source software project’s absorptive capacity by strengthening two salient capabilities: knowledge acquisition and knowledge transfer. Practical implications developed from these findings are presented.