The purpose of this study was to examine the mediating effect of transactive memory between team identification and two outcomes of team effectiveness (i.e. team member satisfaction and team performance). Data were obtained from a survey among 502 employees working in 53 teams, and analyzed by Multilevel Structural Equation Modeling. Results showed that transactive memory partially mediated the relationship between team identification and team effectiveness at the individual level. Moreover, transactive memory, specifically the coordination component, fully mediated the relationship between team identification and team effectiveness at the team level. The study used a cross-sectional design for the questionnaire and no objective measure of team performance. Managers who want to develop effective work teams may be advised to organize team-building activities to strengthen both affective and cognitive aspects. This is the first empirical study to examine the relationships between team identification, transactive memory and team effectiveness from a multilevel perspective.