Warren Gatland believes a major split within the Wales camp undermined their Six Nations display against England.
Wales' top players threatened not to play in their last game on 25 February in protest at the continued financial uncertainty within Welsh rugby.
Gatland revealed a strong divide within the senior squad over potential strike action continued on to the pitch.
However, the head coach insists time has healed the rift as Wales prepare to face Italy in Rome.
"On reflection, the stuff off the field definitely had an impact," he said.
"There was quite a significant split in the group over which way to go and I think that definitely caused some tension within the group for a couple of weeks."
Wales lost 20-10 to England in Cardiff - their third successive loss in the tournament - following a tumultuous build-up.
But while the game went ahead following last-ditch talks between the squad and the Welsh Rugby Union (WRU), the coach believes preparations severely impacted the performance.
Gatland said: "It was quite fractious and I understand people have different opinions. I didn't have an issue with that, but it can create tension.
"Some guys had pretty strong views on one way or the other [over strike action].
"Probably the best reflection were the comments [afterwards] by Justin Tipuric. He spoke about the body language against England.
"In those big moments, there were no celebrations, no slapping backs congratulating each other. The message to them is that we should celebrate those big moments, whether in defence or attack because it brings a team together.
"When I saw that we weren't doing that [against England] it was, on reflection, probably a sign of where we were as a group."
The tumult within Welsh rugby has continued with a financial deal between the WRU and four regions still yet to be signed.
Cardiff, Dragons, Ospreys and Scarlets are all braced to lose some of their biggest stars as they face the reality of drastic budget cuts - as much as £2m in Cardiff's case.
Numerous players remain unclear over their futures and some players, such as Taulupe Faletau, have said the chaos has distracted the squad.
However Gatland believes tensions within the Wales camp have cooled.
"Time heals and in the last couple of weeks things have settled down," he said.
"If things do get signed and get sorted and we get Welsh rugby back on the right track I think it will be positive for everyone."
Prop Wyn Jones, recalled to the starting team, insisted any issue over strike action has been "parked" as Wales face a potential wooden spoon decider at Stadio Olimpico.
"As a player it was hard. The situation wasn't ideal but [the game] went ahead and we're now ready for the next challenge on Saturday. As a squad we're all on the same page now and are in agreement."
Gatland will also hope time together will continue to rebuild harmony within the rank and file.
He is taking a 33-strong squad to Rome for Saturday's Six Nations game against Italy - like Wales, winless in this year's competition.
From there, they will travel to Nice in France before heading to Paris for their final match of this year's Six Nations.
"We are taking the same number that you'll have for the World Cup squad so we are kind of having a bit of a look at what it's like for that preparation for later in the year," he said.