The necessity of finding right skilled people, sharing resource and limitation on cost has made distributed software development indispensable. In a distributed development project, but are working collaboratively toward the outcome. Such offshore service providers follow the traditional process models. Agile practices promote development iterations, open collaboration, and process adaptability throughout the life cycle of the project. Adapting these practices in a distributed environment can help distributed development tackle the challenges of cultural incompatibility, leadership struggle and lack of trust. This paper describes the benefits of using Agile process and Scrum the iterative incremental process in Distributed Software development, and proposes two team structures for its implementation. © 2008 IEEE.