Although it is often assumed that team member's tendency to social loaf is detrimental to team performance, I propose that this relationship is not always negative. Drawing from theories on social loafing, social compensation, and trait activation, I proposed that both the level of conscientiousness and agreeableness in teams could compensate for social loafing tendencies, in terms of team performance. In a study among newly formed student teams (N = 209 teams, n = 644 persons) working on a complex task that exceeded their current skill level, I found support for this idea. Consistent with predictions, social loafing tendencies were positively related to team performance when the level of conscientiousness was high rather than low. A significant three-way interaction between social loafing tendencies, conscientiousness, and agreeableness in predicting team performance indicated that especially if there is a high degree of conscientiousness and agreeableness within the team, team members will compensate for social loafing tendencies, and performance will stay up to par. If there is little tendency to social loaf, the level of conscientiousness becomes less important, while agreeableness stays important for team performance. Given the extensive use of team projects in business schools, the implications of these findings are discussed.