In today’s business world, strategic alliances are becoming a common method for achieving a competitive advantage towards industry rivals. This tool, however, is not a guarantee for success as the failure rate of alliances is between 30-70%. Even with this high failure rate, strategic alliances continue to grow and becoming more and more common. Through strategic alliances, the organizations can gain the possibility to access, acquire and implement new knowledge from its partners as a step to achieve competitive advantage. However, by engaging in alliances or inter-firm arrangements they also place themselves in the risk zone of giving away knowledge, both intentionally or unintentionally, which is also known as knowledge leakage. Studies have shown that trust is important in knowledge sharing, and managers must understand the role of trust and distrust in this equation, in order to be able to successfully achieve an effective and trustworthy knowledge transfer for a firm. Previous research has focused mainly on the effects of trust on knowledge sharing and a few exceptions have focused on knowledge leakage. However, these articles have been ignoring the factor of distrust. The purpose of this thesis therefore lies in investigating the effect the dimensions of both trust and distrust simultaneously have on knowledge sharing and leakage, as theory view trust and distrust as separate but co-existing concepts. The dimensions chosen for investigation are goodwill trust, competence trust, goodwill distrust and competence distrust. In order to achieve this purpose, a quantitative research method was used. A questionnaire was developed and sent out to Swedish firms operating in knowledge-intensive industries according to Eurostat. 55 companies fully completed the questionnaire. From this a factor analysis and regression analysis was conducted in order to fulfill the purpose of this thesis. This thesis found that goodwill trust has a positive effect on knowledge sharing and negative effect on knowledge leakage. Competence trust and competence distrust was found to have a positive relationship with knowledge leakage. Also, the authors developed the dimensions of goodwill and competence distrust as well as empirically proved their existence. This thesis contributes by acknowledging the importance of both concepts, trust and distrust, and also providing managers with an idea of what dimensions of trust and distrust are important when associating it to knowledge exchange.