Addressing inconsistencies in relational demography research, we examine the relationship between cultural dissimilarity and individual performance through the lens of social self-regulation theory, which extends the social identity perspective in relational demography with the analysis of social self-regulation. We propose that social self-regulation in culturally diverse teams manifests itself as performance monitoring (i.e., individuals' actions to meet team performance standards and peer expectations). Contingent on the status associated with individuals' cultural background, performance monitoring is proposed to have a curvilinear relationship with individual performance and to mediate between cultural dissimilarity and performance. Multilevel moderated mediation analyses of time-lagged data from 316 members of 69 teams confirmed these hypotheses. Cultural dissimilarity had a negative relationship with performance monitoring for high cultural status members, and a positive relationship for low cultural status members. Performance monitoring had a curvilinear relationship with individual performance that became decreasingly positive. Cultural dissimilarity thus was increasingly negatively associated with performance for high cultural status members, and decreasingly positively for low cultural status members. These findings suggest that cultural dissimilarity to the team is not unconditionally negative for the individual but in moderation may in fact have positive motivational effects.