The aim of this paper is to advance understanding of interactive knowledge sharing (KS) processes through exploring the role of transactive memory systems (TMSs) and Web 2.0. In the context of the information systems literature, there is little focus on their particular role in KS. To address this gap, this paper develops a conceptual model based on activity theory and critical realism outlining the role of TMS and Web 2.0 as mediating tools. This paper further reveals that their use as tools depends on deeper underlying structures/factors embedded within the community, namely, informal networks and trust among people. The new conceptual model and theoretical propositions are then illustrated by a qualitative study undertaken in Bulgarian organisations. This illustrative case provides support for the model, where TMS and Web 2.0 are found to facilitate KS. It further demonstrates that informal networks and trust among people support the use and the positive effects of these tools. The contribution of this paper is in the new analytical approach and conceptual model developed, which advances our understanding of interactive KS by explaining the linkages between the various factors involved.