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.