ABSTRACT: Increased diversity in the workforce brings several benefits. However, organizations may also face challenges as they seek to embrace diversity within team-based work environments. In this paper, we attempt to gauge the magnitude of this challenge by examining the level of diversity that results when individuals self-select their own team members. We describe a quasi-experimental field study in which we examine the ways individuals select project team members and how the resulting group composition is connected to the success or failure of those teams. We find that teams are most likely to form through prior acquaintance and/or demographic similarities. Linking composition to group process and performance, we find that ethnic diversity decreased similarity of work values but did not affect group performance, which is primarily predicted by satisfaction and conflict. We discuss the results in terms of the challenges and opportunities organizations face with a diverse workforce and a team-based work environment.