Abstract This article studies the effects of the introduction of artificial intelligence (AI) into teams in a laboratory experiment. We randomly assign automated co-workers into “laboratory firms” who are playing a team-based game on the Nintendo Switch console. We demonstrate that even in a task where AI outperforms humans, automation decreases overall team performance and increases coordination failures. These effects are especially large in the short-term and in low- and medium-skilled teams. Moreover, automation reduces team trust and individual effort provision. Our results support the implication that improving collaborative human-machine teams is key to the positive transformation that AI may bring to organizations.