The COVID-19 pandemic has forced many organizations to make an unprecedented shift to remote work, with virtual teams becoming an increasingly important tool for organizations to configure and manage team-based work. The way teams are configured has major implications for how individuals, teams, and organizations collect and contribute knowledge in order to innovate. By looking at team member diversity, this research paper examines the impact of different forms of diversity on the knowledge sharing processes and innovation output of virtual teams. Responses from 103 virtual team members based in the U.K. are used to assess the role of diversity inputs, on knowledge sharing processes and innovation output. Partial least squares structural equation modeling was employed to assess and validate the input-process-output model with statistically significant empirical results presented. Furthermore, the empirical results infer that knowledge sharing plays a critical role in mediating the role between diversity and innovation output in virtual team settings. Findings are discussed and implications are presented.