Software development teams are increasingly faced with unanticipated obstacles to effectiveness that require extemporaneous actions. Team improvisation has been identified as an important team situated response to emergent challenges to team effectiveness. However, the efficacy of team improvisation is not well understood in the context of software development teams—which perform complex, knowledge intensive tasks. We examine the efficacy of team improvisation in enhancing team effectiveness and identify team geographic dispersion as an important boundary condition. We test our hypotheses using data from 299 team leaders and members belonging to 71 teams. We find that team improvisation positively affects team performance, and that the degree of team geographic dispersion moderates the relationship between improvisation and team effectiveness. Theoretical and practical implications are offered.