Through a multi-period study of software teams in time-bound projects, we address the question: In what contexts do agile methods improve systems development performance? Our model includes team network and task characteristics as antecedents and transactive memory system (TMS) as a consequence of the use of agile practices. We further posit that team TMS also moderates the impact of agile practices on project performance. We test the hypothesized model using data collected in three waves from student teams who developed a database system over the course of a semester. Results evince that project performance does not improve through the use of agile practices alone, but does improve when task variability is high and the project team has a high degree of TMS. Results also indicate that the knowledge structure of a software team changes over time and the use of agile practices also directly contributes to the development of TMS within the team.