This quantitative study explores the relationship between school leadership and the development and sustenance of teacher social capital. The literature review discusses aspects of leadership theory to elucidate understanding of how leadership influences teachers’ working relationships. Quantitative methodology and analyses ascertain the correlation between Leithwood et al.’s dimensions of transformational leadership and the author’s dimensions of teacher social capital. Study findings indicate significant, positive moderate to high moderate correlations between: (1) transformational leadership and the environmental conditions nurturing teacher social capital; (2) leadership and teacher social capital; and (3) leadership and teacher collective efficacy (TCE). An additional major finding is the perception of higher levels of transformational leadership among teachers in middle performing and high performing schools as compared to the perceptions of teachers in low performing schools. This study provides evidence of the importance of transformational leadership in the development of teacher social capital within a school. High levels of teacher social capital should result in positive outcomes of student achievement, teacher quality and teacher job satisfaction. The study findings, interpretations and conclusions contribute to both school leadership and school improvement literature and should inform discussions about leadership development and the impact of leadership on teacher working relationships.