We present Latent Theory of Mind (LatentToM), a decentralized diffusion policy architecture for collaborative robot manipulation. Our policy allows multiple manipulators with their own perception and computation to collaborate with each other towards a common task goal with or without explicit communication. Our key innovation lies in allowing each agent to maintain two latent representations: an ego embedding specific to the robot, and a consensus embedding trained to be common to both robots, despite their different sensor streams and poses. We further let each robot train a decoder to infer the other robot's ego embedding from their consensus embedding, akin to theory of mind in latent space. Training occurs centrally, with all the policies' consensus encoders supervised by a loss inspired by sheaf theory, a mathematical theory for clustering data on a topological manifold. Specifically, we introduce a first-order cohomology loss to enforce sheaf-consistent alignment of the consensus embeddings. To preserve the expressiveness of the consensus embedding, we further propose structural constraints based on theory of mind and a directional consensus mechanism. Execution can be fully distributed, requiring no explicit communication between policies. In which case, the information is exchanged implicitly through each robot's sensor stream by observing the actions of the other robots and their effects on the scene. Alternatively, execution can leverage direct communication to share the robots' consensus embeddings, where the embeddings are shared once during each inference step and are aligned using the sheaf Laplacian. In our hardware experiments, LatentToM outperforms a naive decentralized diffusion baseline, and shows comparable performance with a state-of-the-art centralized diffusion policy for bi-manual manipulation. Project website: https://stanfordmsl.github.io/LatentToM/.