With the worldwide COVID-19 outbreak, the gig economy, the lightning-fast technological advancements, workforce diversity, the emergence of freelance virtual contributors, and the blurring of work-life boundaries, a new collective leadership model called “Shared Leadership” became imperative. In this context, the virtual teams may experience conflicts that must be resolved constructively so that the team members can assume their duties and demonstrate excellent positive team behaviour, including team performance. The Team must be in an “empowered mental state” to achieve this. The existing literature acknowledges that Shared Leadership (SL) is an antecedent for Team Empowerment (TE). However, these studies hardly examine the mental process through which SL leads to TE. The literature explains the role of psychological capital as the mediating factor between SL and employees’ positive job outcomes like team citizenship behaviour and team performance, which are physical and behavioural outcomes. This article fills an essential gap in the literature by examining the involvement of Team Psychological Capital (TPC) in helping SL to develop TE. Here, data was collected from 402 virtual team members belonging to 48 teams from various Indian industries. By conducting partial least squares structural equation modelling and looking at the Team as the unit of analysis, the Study showed that Team psychological capital partially mediates the relationship between SL and TE. Based on the results, the authors recommend that managers focus on decentralized Leadership and take steps to develop TPC for creating a high-empowered team.