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The relationship between size and performance of collaborative human small groups has been studied broadly across management, psychology, economics, sociology, and engineering disciplines. However, empirical research findings on this question remain equivocal. Many of the earlier studies centered on empirical human-subject experiments, which inevitably involved many confounding factors. To obtain more theory-driven mechanistic explanations of the linkage between group size and performance, we developed an agent-based simulation model that describes the complex process of collaborative group decision-making on problem-solving tasks. To find better solutions to a problem with given complexity, these agents repeatedly explore and share solution candidates, evaluate and respond to the solutions proposed by others, and update their understanding of the problem by conducting individual local search and incorporating others’ proposals. Our results showed that under a condition of ineffective information sharing, group size was negatively related to group performance at the beginning of discussion across each level of problem complexity (i.e., low, medium, and high). However, in the long run, larger groups outperformed smaller groups for the problem with medium complexity and equally well for the problem with low complexity because larger groups developed higher solution diversity. For the problem with high complexity, the higher solution diversity led to more disagreements which in turn hindered larger groups’ collaborative problem-solving ability. Our results also suggested that, in small collaborative team settings, effective information sharing can significantly improve group performance for groups of any size, especially for larger groups. This model provides a unified, mechanistic explanation of the conflicting observations reported in the existing empirical literature.