In SQL Server 2005, we can create temp tables one of two ways:
declare @tmp table (Col1 int, Col2 int);
or
create table #tm
Temp table: A Temp table is easy to create and back up data.
Table variable: But the table variable involves the effort when we usually create the normal tables.
Temp table: Temp table result can be used by multiple users.
Table variable: But the table variable can be used by the current user only.
Temp table: Temp table will be stored in the tempdb. It will make network traffic. When we have large data in the temp table then it has to work across the database. A Performance issue will exist.
Table variable: But a table variable will store in the physical memory for some of the data, then later when the size increases it will be moved to the tempdb.
Temp table: Temp table can do all the DDL operations. It allows creating the indexes, dropping, altering, etc..,
Table variable: Whereas table variable won't allow doing the DDL operations. But the table variable allows us to create the clustered index only.
Temp table: Temp table can be used for the current session or global. So that a multiple user session can utilize the results in the table.
Table variable: But the table variable can be used up to that program. (Stored procedure)
Temp table: Temp variable cannot use the transactions. When we do the DML operations with the temp table then it can be rollback or commit the transactions.
Table variable: But we cannot do it for table variable.
Temp table: Functions cannot use the temp variable. More over we cannot do the DML operation in the functions .
Table variable: But the function allows us to use the table variable. But using the table variable we can do that.
Temp table: The stored procedure will do the recompilation (can't use same execution plan) when we use the temp variable for every sub sequent calls.
Table variable: Whereas the table variable won't do like that.