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This study advances research on interpersonal exchange relationships by integrating social exchange, workplace friendship and climate research to develop a multilevel model. Data were collected from 215 manager-employee dyads working within 36 teams. At the individual level, LMX was positively associated with TMX and workplace friendship. Further, workplace friendship was positively related to TMX, and mediated the LMX-TMX relationship. At the team level, HLM results demonstrated that the relationship between LMX and workplace friendship was moderated by affective climate. Findings suggest that high-quality LMX relationships are associated with enhanced employees' perceptions of workplace friendship when affective group climate was strong.