This study examined the effects of empowering leadership on employees in a customer service organization, using data from 266 employees and their supervisors from 41 work teams in a division of a large Hong Kong telecommunications corporation. Empowering leadership had acceptable levels of within‐group agreement and between‐group variability, providing support for its analysis as a group‐level construct. Testing a multi‐level model in which psychological empowerment was hypothesized to mediate the relationship between both within‐group and between‐group empowering leadership and individual outcomes, empowering leadership was associated with psychological empowerment at both levels. There was evidence of significant mediation effects at both the individual and group levels. These findings underline the importance of analysing both within‐group and between‐group differences in empowering leadership and their effects on individual attitudes and behaviours.