Virtual teams (VTs) comprise knowledge workers who are geographically dispersed, may be constrained by different time zones, and primarily co-ordinate their work through suitable communication tools. Virtual teams are increasingly being used by corporate organisations due to their benefits such as access to international markets where there is an abundance of talent and cheaper expertise as well as provision of a flexible workforce. The communication tool is an important component of a virtual team and VTs heavily rely on the communication tool for meeting their task specific and other needs. Existing literature on virtual team communication tools specifies email, videoconferencing, telephone, fax and social media tools such as blogs and wikis. Email, videoconferencing, telephone and fax are regarded as core virtual team communication tools. Corporate organisations are actively engaging with social media tools to meet their VTs’ day to day work needs such as communication, collaboration and knowledge sharing. In addition, social media tools also provide other benefits such an ability to create groups and initiate conversations, information broadcast and good social networking characteristics to name a few. Virtual team dynamics such as trust, team cohesion, satisfaction, conflicts, communication effectiveness and leadership are key to how well virtual teams function. Previous research has attempted to explain the relationship between the communication tool and virtual team dynamics however the relevance of this relationship in the context of social media tools remains unanswered. To this end, this research contributes by empirically examining the effect of social media tools on virtual team dynamics; trust, team cohesion, satisfaction, conflicts, communication effectiveness and leadership are investigated in this research. This research builds upon the existing literature and explores the relationship between virtual team dynamics and the transactive memory system (TMS). Transactive memory system refers to the development of a shared internal system for encoding, storing and retrieval of information among the team members. A conceptual research model is developed and it posits that TMS mediates the relationship between social media tools and virtual team dynamics, a phenomenon which has not been investigated by any of the previous research studies. The primary data is collected in form of a 6-point Likert questionnaire and semi-structured interviews. In following a mixed method research design, the research model is empirically tested and validated by performing a partial least squares structural equation modelling on the Likert questionnaire data during the quantitative phase. A nested modelling approach is used to understand TMS mediation. The qualitative phase provides a deeper insight into the phenomenon represented by the research model and contributes by providing a rich understanding of the factors that contribute to the results achieved in the quantitative phase. The research findings are novel and fill the gaps in knowledge. First, the hypotheses testing showed a strong support for the research model which answered the research questions and helped achieve the research goals. Second, the qualitative findings provide an understanding of the underlying reasons which affected virtual team dynamics through the use of social media tools. Overall, the research findings indicate that TMS mediates the relationship between social media tools and each of the six virtual team dynamics under consideration: trust, team cohesion, satisfaction, conflicts, communication effectiveness, and leadership. This research makes a number of contributions to theory and practice. First, underpinning the effect of social media tools on virtual team dynamics, this research contributes literature demonstrating this effect. Second, in examining the effect of social media tools on virtual team dynamics through a TMS lens, this research contributes a novel research model towards the literature on Information Systems, Psychology, Management and Organisational Studies. Third, this research extends the existing knowledge on virtual teams, social media tools, computer-mediated communication, group decision support systems, group support systems, electronic meeting systems and collaborative technologies. Finally, this research contributes to the transactive memory system theory through an application of this theory in the context of social media tools and also investigates the relationship between TMS and virtual team dynamics. The practical relevance of this research lies in the guidelines for practitioners who work in virtual teams and use social media tools. It provides a reference for managers who are looking into the use of social media tools within their virtual teams. This research has implications for the ‘strategic’ internal use of social media tools within organisations to support work processes as well as the provisioning of a platform for nurturing the social aspects of the organisation. Keywords: Social media, team dynamics, transactive memory system, virtual teams.