Software development process ambidexterity (SDPA) is the ability to demonstrate both process alignment and process adaptability simultaneously. Realizing process ambidexterity has recently been suggested as an effective approach to improving the performance of software development (SD) projects. To understand the mechanisms underlying the effects of ambidexterity, we focus in this study on the mediating effects of coordination, one of the most important activity in SD projects. Specifically, we hypothesize a mediating effect of coordination costs and coordination effectiveness on the relationship between SDPA and project performance. We conducted a quantitative study involving 104 SD projects across 10 firms to test the model. The results strongly suggest that the positive relationship between SDPA and project performance is negatively mediated by coordination costs and positively mediated by coordination effectiveness. We validate our research model with a case study in an organization employing several hundred IT professionals and derive several practical implications on this basis.