As a rule of thumb, for small to medium volumes of data and simple usage scenarios you should use table variables. (This is an overly broad guideline with of course lots of exceptions - see below and following articles.)
Some points to consider when choosing between them:
- Temporary Tables are real tables so you can do things like CREATE INDEXes, etc. If you have large amounts of data for which accessing by index will be faster then temporary tables are a good option.
- Table variables can have indexes by using PRIMARY KEY or UNIQUE constraints. (If you want a non-unique index just include the primary key column as the last column in the unique constraint. If you don't have a unique column, you can use an identity column.)
- Table variables don't participate in transactions, logging or locking. This means they're faster as they don't require the overhead, but conversely you don't get those features. So for instance if you want to ROLLBACK midway through a procedure then table variables populated during that transaction will still be populated!
- Temp tables might result in stored procedures being recompiled, perhaps often. Table variables will not.
- You can create a temp table using SELECT INTO, which can be quicker to write (good for ad-hoc querying) and may allow you to deal with changing datatypes over time, since you don't need to define your temp table structure upfront.
- You can pass table variables back from functions, enabling you to encapsulate and reuse logic much easier (eg make a function to split a string into a table of values on some arbitrary delimiter).
- Using Table Variables within user-defined functions enables those functions to be used more widely (see CREATE FUNCTION documentation for details). If you're writing a function you should use table variables over temp tables unless there's a compelling need otherwise.
- Both table variables and temp tables are stored in tempdb. This means you should be aware of issues such as COLLATION problems if your database collation is different to your server collation; temp tables and table variables will by default inherit the collation of the server, causing problems if you want to compare data in them with data in your database.
- Global Temp Tables (##tmp) are another type of temp table available to all sessions and users.
