UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 8-K

                                 CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF
             REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 31, 2006

                                 TeamStaff, Inc.
                                 ---------------
             (Exact name of registrant as specified in its charter)
                         COMMISSION FILE NUMBER: 0-18492




                            New Jersey                                                        22-1899798
  (State or other jurisdiction of incorporation or organization)                 (I.R.S. Employer Identification No.)


                                300 Atrium Drive
                               Somerset, NJ 08873
                               ------------------
              (Address and zip code of principal executive offices)
                                 (732) 748-1700
                                 --------------
              (Registrant's telephone number, including area code


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     [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
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 Item 1.01  Entry Into a Material Definitive Agreement

On May 25, 2006, TeamStaff and CompuPay, Inc. executed a material definitive
agreement, effective May 31, 2006, for the sale of TeamStaff's payroll division,
DSi Payroll Services to CompuPay, Inc. for $9.0 million. The transaction closed
on May 31, 2006. The general terms of the transaction are an all-cash sale for
$9,000,000, subject to an escrow of $250,000 for certain post-closing
contingencies. The agreement is for the sale of substantially all of the assets
of DSi Payroll Services, and also includes a transition agreement whereby
CompuPay will sublease certain office space at DSi's current location from
TeamStaff, Inc., among other standard agreements. There are also working capital
requirements and further determinations that may result in a purchase price
adjustment, which the Company expects to be immaterial. All matters relative to
the transaction will be finally determined, and the transaction finally
completed, on or about September 13, 2006. A copy of the form of Asset Purchase
Agreement and all Exhibits and Schedules thereto is attached as Exhibit 10.1 to
this filing. A copy of the press release announcing the transaction as released
on May 31, 2006 is attached as Exhibit 99.1 to this filing.

References in this filing to "TeamStaff" the "Company," "we," "us" and "our"
refer to TeamStaff, Inc. and its wholly owned subsidiaries. This Current Report
on Form 8-K includes "forward-looking statements" as defined by the Federal
Securities Laws. Forward-looking statements are identified by words such as
"believe," "anticipate," "expect," "intend," "plan," "will," "may" and other
similar expressions. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. Forward-looking statements included in this report
involve known and unknown risks, uncertainties and other factors which could
cause TeamStaff's actual results, performance (financial or operating) or
achievements to differ from the future results, performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements. We based these forward-looking statements on our current
expectations and best estimates and projections about future events. Our actual
results could differ materially from those discussed in, or implied by, these
forward-looking statements. The following factors (among others) could cause our
actual results to differ materially from those implied by the forward-looking
statements in this Current Report on Form 8-K: our ability to continue to
recruit qualified temporary and permanent healthcare professionals and
administrative staff at reasonable costs; our ability to retain qualified
temporary healthcare professionals and administrative staff for multiple
assignments at reasonable costs; our ability to attract and retain sales and
operational personnel; our ability to enter into contracts with hospitals,
healthcare facility clients, affiliated healthcare networks, physician practice
groups and the United States government on terms attractive to us and to secure
orders related to those contracts; our ability to demonstrate the value of our
services to our healthcare and other facility clients; changes in the timing of
hospital, healthcare facility clients', physician practice groups' and U.S.
Government orders for and our placement of temporary and permanent healthcare
professionals and administrative staff; the general level of patient occupancy
at our clients' facilities; the overall level of demand for services offered by
temporary and permanent healthcare staffing providers; the variation in pricing
of the healthcare facility contracts under which we place temporary and
permanent healthcare professionals; our ability to successfully implement our
strategic growth, acquisition and integration strategies; the potential adverse
effects on our earnings of completed acquisitions; our ability to successfully
integrate completed acquisitions into our current operations; our ability to
manage growth effectively; our ability to leverage our cost structure; the
performance of our management information and communication systems; the effect
of existing or future government legislation and regulation; our ability to grow
and operate our business in compliance with these legislation and regulations;
the impact of medical malpractice and other claims asserted against us; the
disruption or adverse impact to our business as a result of a terrorist attack;
our ability to carry out our business strategy; the loss of key officers, and
management personnel that could adversely affect our ability to remain
competitive; the effect of recognition by us of an impairment to goodwill; risks
related to our revolving line of credit; risks associated with our health and
worker's compensation claims experience; competition risks; the effect of
adjustments by us to accruals for self-insured retentions and other general
risks related to our business, industry and stock.. Other factors that could
cause actual results to differ from those implied by the forward-looking
statements in this Current Report on Form 8-K are set forth in our Annual Report
on Form 10-K for the year ended September 30, 2005, our 10-Q for the quarter
ending December 31, 2005 and our other previously filed Current Reports on Form
8-K. We undertake no obligation to update the forward-looking statements in this
filing.


Item 9.01: Financial Statements and Exhibits.


         (a) Financial Statements.

             None

         (b) Pro Forma Financial Information

             None

         (c) Shell Company Transactions

             None

         (d) Exhibits.

             10.1 Form of Asset Purchase Agreement, Exhibits and Schedules
             99.1 Press Release dated as of May 31, 2006






                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.


                                         TeamStaff, Inc.

                                         By: /s/ James D. Houston
                                         -------------------------------------
                                         Name:  James D. Houston
                                         Title: Vice President of Business and
                                                Legal Affairs/General Counsel
                                         Date:  May 31, 2006