How the race and gender diversity of team members is related to innovative science and technology outcomes is debated in the scholarly literature. Some studies find diversity is linked to creativity and productivity, other studies find that diversity has no effect or even negative effects on team outcomes. Based on a critical review of the literature, this paper explains the seemingly contradictory findings through careful attention to the organizational contexts of team diversity. We distinguish between representational diversity and full integration of minority scientists. Representational diversity, where organizations have workforces that match the pool of degree recipients in relevant fields, is a necessary but not sufficient condition for diversity to yield benefits. Full integration of minority scientists (i.e., including women and people of color) in an interaction context that allows for more level information exchange, unimpeded by the asymmetrical power relationships that are common across many scientific organizations, is when the full potential for diversity to have innovative outcomes is realized. Under conditions of equitable and integrated work environments, diversity leads to creativity, innovation, productivity, and positive reputational (status) effects. Thus, effective policies for diversity in science and engineering must also address integration in the organizational contexts in which diverse teams are embedded.