This study examines the influence of psychological contracts on the relations between social ties and knowledge exchange in virtual teams. We empirically tested our model in a field study of virtual teams in a large, multinational R&D firm. Results of structural equation modeling suggest two important antecedents to psychological contracts of knowledge sharing: instrumental and relational embeddedness. Psychological contracts of knowledge sharing are positively associated with knowledge contribution and acquisition. Implications for research and practice are discussed with respect to emerging issues in contemporary psychological contracts.