Software development teams need highly valuable knowledge to carry out knowledge-intensive development activities. Agile teams are cross-functional teams that promote sharing of project-specific knowledge through frequent face-to-face interaction, effective communication and customer collaboration. Knowledge sharing is difficult for distributed Agile teams due to spatial, temporal, and cultural barriers, which negatively affect face-to-face interaction, communication and collaboration. There seems to be very few studies that focus on knowledge management in distributed Agile teams. Through a Grounded Theory study that involved 45 participants from 28 different software companies in the USA, India and Australia, we investigate distributed software development from the specific perspective of Agile teams. In this paper, we describe how Agile teams gather, store, share and use knowledge in distributed software development.