Transformational leadership has consistently been argued to enhance team innovation, yet related research has generated ambiguous findings. We suggest that our understanding of leader impact on innovation would benefit from explicitly recognizing both group- and individual-focused transformational leadership dimensions and their distinct effects on team and individual innovation. In particular, we predict a novel contrasting effect in which group-focused transformational leader behavior has a positive impact on team innovation but a negative impact on individual innovation. We further argue that this divergence in leader effect is strengthened by task interdependence, which enhances the negative effects of group-level transformational leadership on individual innovation. Data from 195 members of 56 teams support our predicted pathways, which contribute to a clearer understanding of the complex, multilevel effects of leadership in innovation in teams, and highlight the importance of differentiating between team and individual leader dimensions and outcomes.