This paper makes two original contributions to the IT project governance literature. First, it shows how two different types of governance-knowledge fit at the project level enhance the effective exercise of two classes of project decision rights, which in turn mediates the effects of IT/client departments’ knowledge on ISD performance. Second, it shows that ISD efficiency and effectiveness are influenced by the effective exercise of different classes of project decision rights. Collectively, these findings significantly extend a fledgling, exploratory research stream on IT project governance (Henry 2004, Mähring 2002), contribute a novel project-level theory to the IT governance literature, and complement prior work on information systems (IS) project control (Choudhury and Sabherwal 2003; Kirsch 1996, 1997; Kirsch et al. 2002).