Purpose: The article proposes three prerequisites to authentic leadership by school principals: self-knowledge, a capacity for moral reasoning, and sensitivity to the orientations of others. Design/methodology/approach: A conceptual framework, based on research on the valuation processes of school principals and their strategic responses to ethical dilemmas, is used as a practice grounded approach to describing authentic leadership and the acquisition of moral literacy by school leaders. Findings: Four motivational bases for administrative decision making are described: self-interest/personal preferences, rational consensus, rational consequences, and trans-rational ethics/principles. The achievement of self-knowledge, capacity and sensitivity to others can be best achieved in professional settings through strategies of personal reflective practice, and sustained dialogue on moral issues and the ethical dilemmas of educational practice. Practical implications: Principals need the capacity to discriminate actual intentions, within themselves and among others. This is not moral relativism, nor is it value absolutism. It is critical thinking and moral literacy. Originality/value: Several resources are provided as tools for principals and scholars to use in support of developing these capacities within themselves and amongst others. (Contains 3 figures and 2 notes.)