The prevalence of virtual teams in modern organizations poses additional barriers to applications of vertical leadership due to the lack of face-to-face contact. Shared leadership as an emerging distributed leadership from team members shows promise in tackling such barriers when managing virtual teams. However, prior evidence for the relation between shared leadership and virtual team performance remains equivocal and inconsistent. Drawing on input-process-output model and self-determination theory, we propose a multilevel mediation and moderation model to investigate how and when shared leadership conduces to good performance outcomes in virtual work settings. We conducted a field study comprised of 73 virtual teams with 353 members. Results showed that shared leadership had a positive effect on team performance through team cohesion at the team level, and such effect was only significant in smaller virtual teams, rather than in larger ones. Also, shared leadership had a positive effect on individual performance via proactive behavior across levels, furthermore, such effect was only significant under the condition of high communication effectiveness; otherwise, it was nonsignificant. These findings expand the multilevel impact of shared leadership in virtual teams and contribute to resolving the controversy about the relation between shared leadership and performance outcomes.