Members of dispersed work teams may be located geographically in a variety of configurations. In fully-dispersed teams, each member resides in a unique location, whereas partially-dispersed teams are composed of some colocated and some distant members. Configurations in which team members are divided into geographically-distinct subgroups may create faultline dynamics, characterized by disruptive intergroup relations between the subgroups including diminished trust and increased conflict. In a study of 45 groups consisting of a total of 266 graduate students from 15 different schools, we examined three different configurations of geographical dispersion in 6-person teams: (1) fully dispersed, (2) three colocated subgroups with two people each, and (3) two colocated subgroups of three people each. Both group-level and dyad-level analyses supported the faultline hypothesis. The study suggests that various contextual factors stemming from team members' geographical locations may shift the dimensions of diversity that are most consequential for team functioning.