Research is presented in which workgroup emotional climate and emotional labor are conceptualized as contrasting types of emotional exchange within teams, with the former defined as team-member directed emotional exchanges and the latter as the outward directed emotional exchanges required to enact one’s role. A sample of 840 workgroup members from 148 workgroups in China provided the data for analysis. Results showed that positive workgroup emotional climate is a source of group efficacy with positive consequences for workgroup performance. The findings also lend support to the idea that people have limited emotional resources and thus, while a positive workgroup emotional climate improves group performance, this relationship is weakened as emotional labor increases. The unexpected positive relationship between negative workgroup emotional climate and workgroup performance in high emotional labor team settings suggest that coping mechanisms may come into play to ameliorate negative workgroup performance outcomes when team-member emotional exchanges are typified as negative.