In the era of cloud-native architectures and microservices, managing API contracts and versioning has become a critical challenge for distributed engineering teams operating within agile software development pipelines. As APIs serve as the foundational interfaces between services, teams, and external stakeholders, their stability, consistency, and traceability are paramount to maintaining system integrity and fostering rapid delivery. The increasing decentralization of software teams and the proliferation of independently deployed services demand rigorous governance over API definitions, versioning strategies, and collaboration workflows. This explores key methodologies for maintaining and evolving API contracts in complex, multi-team environments. It examines versioning schemes such as semantic versioning, backward-compatible design, and the use of API gateways and documentation portals to mitigate disruption during updates. Emphasis is placed on the importance of automated contract validation, consumer-driven contract testing, and continuous integration (CI) tooling to detect breaking changes and prevent downstream failures. Furthermore, this addresses governance models, including the use of API style guides, review processes, and version-control integration to promote consistent design and cross-team alignment. Tooling ecosystems such as Swagger/OpenAPI, Postman, Pact, and Backstage are evaluated for their roles in automating API design, testing, and lifecycle management. Additionally, the study highlights the human and organizational aspects of API evolution—particularly the challenges of asynchronous collaboration, knowledge transfer, and maintaining documentation across time zones and varying development cadences. Ultimately, this proposes best practices and future directions, including AI-assisted contract diffing, policy-as-code approaches for API governance, and observability-driven contract validation. By establishing robust strategies for managing API contracts and versioning, engineering teams can improve agility, reduce integration risk, and build scalable, evolvable systems that meet the demands of fast-paced software delivery across distributed contexts.