Context: In this article we considered knowledge transfer (KT) in global software development (GSD) from two perspectives, state-of-the-art and state-of-the-practice, in order to identify what are the challenges that hamper the success of KT in global software teams, as well as to find out what are the mitigation strategies that can be used to overcome such challenges. Objectives: The overall aim of this work is to provide a body of knowledge for enabling successful KT in GSD settings. This is achieved by an in-depth understanding of KT challenges and mitigation strategies, both from the perspective of literature and industry. It also identifies the similarities and differences in challenges and strategies gathered from literature studies and industrial experts. Methods: In order to fulfill the aim of the research, we collected data through a systematic literature review (SLR) and conducted interviews with industrial experts. Through the SLR we found 35 primary studies relevant to our objectives. We also conducted eight interviews of experienced industrial professionals from eight different multinational companies world-wide. For analyzing the data we used grounded theory and cross-case analysis. Results: In total, 60 different challenges and 79 unique mitigation strategies are identified from both SLR and interview results. The challenges and mitigation strategies are grouped into three core categories of personnel, project and technology factors, thus giving rise to a conceptualization called as 2PT factors. There are greater numbers of challenges and mitigation strategies in the project and personnel factors, highlighting the complex interplay of project-related and human-intensive issues in GSD projects, while the technology factor plays the role as facilitator in transferring knowledge. The study also maps the mitigation strategies to challenges, which can guide practitioners in their selection of strategies to use for overcoming KT challenges in GSD. Conclusions: We conclude that effective management of project and personnel factors, facilitated by technological factors, are crucial for a successful transfer of knowledge in GSD projects. Thus in future, the researchers and practitioners need to focus on the 2PT factors for ensuring effective KT in GSD settings.