Traditionally, research on group affect has been shaped by the perspective of affect convergence. Under this perspective, group affect is presumed to converge (become homogenous) for group functioning to be explained meaningfully. Scholars of group affect have recently begun to question this premise, however, arguing that affect diversity among members might instead be inherent in a team’s work life. As such, it might be that affect heterogeneity, rather than homogeneity, is a key determinant of successful group functioning such as team creativity. On the other hand, affect heterogeneity may be seen to result in interpersonal strain and dissonance, which may damage creative processes. In an attempt to resolve this conundrum, we draw on van Knippenberg, De Dreu, and Homan’s (2004) categorization-elaboration model to explore why and when a team’s diversity in state affect may promote and inhibit team creativity. Specifically, we sought to investigate how Transactive Memory System (TMS) might help to reconcile the potentially contradictory effects of affect diversity. To do this, we collected 1166 weekly reports from 59 project teams with 321 team members. Stemming from these data, we found support for our idea that affect heterogeneity is positively related to concurrent team creativity for teams with a more developed TMS, but is negatively related to creativity for teams with a less developed TMS. We conclude with a discussion of the implications of our findings for theory and practice.