Organizations often utilize empowerment as a way to bolster performance. It is largely assumed, however, that its impact in this capacity is equivalent across organizational members. We tested this notion within a sample of 420 employees belonging to 75 teams in a Chinese organization and found that team empowerment related positively to supervisor-rated in-role and self-rated extra-role performance through its effect on individual psychological empowerment. More important, employee–coworker demographic dissimilarity moderated both stages of this indirect relationship. Specifically, when employee–coworker sex dissimilarity was higher, the following relationships were attenuated: (a) team empowerment–individual empowerment, (b) individual empowerment–in-role performance, and (c) individual empowerment–extra–role performance. Collectively, the results illustrate that the impact of empowerment is contingent upon demographic dissimilarity.