Digital innovations are revolutionizing the way businesses and industries operate. Yet, the functioning of teams dealing with digital innovations remains elusive. This study offers new theoretical and empirical insights about how innovation teams function within the context of digital transformation through a better understanding of the team process-cognition nexus. In this study, a qualitative, in-depth investigation is carried out with three innovation teams, embedded in three telecommunications organizations. The innovation teams that are studied deal with the development of solutions based on digital technological innovations. The findings illustrate that digital innovation teams depend on two cognitive states to function: team-specific cognitions required for digital innovation and digital project-specific cognitions. Each cognitive state is shaped and transformed by distinct interactions between team cognition, teamwork, and taskwork throughout the digital innovation process. This study depicts a dynamic model that illustrates the functioning of innovation teams across the different stages leading to digital innovation materialization. Opportunities for further research are offered.