This study examines the impact of language diversity on interpersonal relationships in multinational and national/domestic teams in a multilingual country – India. Specifically, it explores whether and how the influence of language diversity differs in the two types of multilingual project teams. To this end, using direct observations and semi-structured interviews, we conducted a thematic analysis and found that native language-based faultlines and groups exist in both kinds of teams. However, such faultlines and language-based groups can disintegrate into smaller, regional dialect-based subgroups due to the emergence of dialect faultlines. Furthermore, evidence suggests that multilingual managers are more effective as boundary spanners in bridging the faultlines in multinational teams; at the same time, they need to be aware of the distinction between language differences and faultlines. This study provides the required distinction between language diversity and the role of multilingual managers in national and multinational teams in an understudied context, thereby contributing to the literature on language diversity.