Version control is significant in software projects as it enables teams to manage changes to the source code effectively. It allows developers to track, revert, and collaborate on code modifications without fear of losing previous work. Utilizing systems like Git, teams can maintain a complete history of code versions, making it easier to identify bugs and understand the evolution of the project. Furthermore, it facilitates collaboration by enabling multiple developers to work on different features simultaneously, thus enhancing productivity and ensuring a more organized development process.