The increased flexibility that can be achieved through the use of an agile project management system, make it a popular management style within software development projects. Despite the many benefits of using agile teams, there are however also challenges that are likely to occur within these systems. By using an extended version of Dickinson and McIntyre's teamwork model, this study identifies possible teamwork challenges that may occur when an agile project management method is used, and discusses how a company can address them. The study is conducted through an interview-based case study of a software development company with self-governing agile teams. This study finds that a lack of shared mental models and inadequate team leadership are sources for teamwork challenges within agile teams. Furthermore this study identifies challenges in relation to team orientation, back-up functions and communication. By using existing theories on agile teams and teamwork, the paper explains why these challenges likely have occurred and how they are related to the use of an agile project management. Finally, the paper provides some suggestions for practice based on the discussion. The suggested solutions involve the provision of better key performance indicators to establish shared mental models and a rotation of team roles in order to increase redundancy and back-up functions.