A team member acquires knowledge to successfully complete team tasks with other members by accessing his/her available knowledge sources. In this knowledge process, individual members can use (1) internal knowledge source from knowledgeable coworkers or formal sources within their organizational boundaries. They can also rely on (2) external knowledge source by networking with external experts or informal sources outside their organizations. To learn knowledge acquired from internal/external sources and apply it to team tasks, individual members adopt two different learning modes: (1) exploitation by repeatedly adopting and applying the existing knowledge and (2) exploration by idiosyncratically developing their own understanding. Regarding such two dimensions of knowledge processing (i.e., knowledge sourcing and individual learning), the social categorization and the information/decision-making perspectives suggest that team diversity has different effects on individual performance, which consists of task-relevant performance and creative performance. Moreover, prior studies using single-level research designs have overlooked the multi-level nature of knowledge processing in which individual members are influenced by one another. To compromise the different suggestions from these competing theories and to explain the contextual effects of team diversity in knowledge processing, this study conceptualizes a two-dimensional team diversity in terms of knowledge sourcing scope and individual learning mode. We then hypothesize its top-down effects on individual knowledge processing in work groups. The multi-level approach suggested in this study might advance our understanding of team diversity in knowledge processing and its effects on individual performance by integrating the cross-level associations into a single study.