<p>Team co-location is a hallmark of Agile software development that advocates face-to-face interaction and close collaboration among team members. Distributed teams, however, use Agile methods despite the separation of team members through space, time and culture. Little is known about how distributed teams use Agile methods for software development. A Grounded Theory research study that involved 55 participants from 38 different software companies in the USA, India, and Australia was carried out to investigate the key concern of distributed teams in Agile software development. This thesis proposes “The Theory of One Team” which explains how a distributed team in Agile software development adopts explicit strategies for bridging spatial, temporal, and socio-cultural distances, while facing critical impact factors, in order to become one team. This thesis primarily describes how a distributed team resolves the key concern of becoming one team. This thesis also provides the members of a distributed team with techniques for building trust with one another. In addition, this thesis serves to inform senior managers about the importance of supporting distributed teams in Agile software development.</p>