Cultural diversity is on the rise in professional sports teams. However, surprisingly few studies have been conducted on the consequences of cultural diversity on sports teams. Thus, this paper addresses negative and positive effects of cultural diversity on pro sports teams while referring the term “group diversity” to differences in cultural/ ethnic backgrounds. We address negative aspects such as prejudice and discrimination, and explain team fragmentation using ingroup–outgroup bias, social identity theory, scapegoat theory, and integrated threat theory. Furthermore, we apply theories that may explain positive effects of culturally diverse teams, such as cognitive resource diversity theory, the contact hypothesis, and the social categorization framework. This paper attempts to fill a gap in diversity research on professional teams by revealing its negative and positive effects and exploring the applicability of various diversity theories in a sports context. Furthermore, it may even help to develop strategies and techniques on how to assist diverse sports teams to build team cohesion and further advance their performance.