This paper attempts to identify leadership practices of school principals as they engaged in exploring and exploiting possibilities in and around the school contexts to build teacher capacity for change. Based on interview data of school principals, this paper shows that principals from different schools engaged in qualitatively different practices when they led their schools in building teacher capacity for school improvement. Three approaches to teacher development are identified, namely deficit approach, interactive-growth approach and participatory-growth approach, each delineating a unique set of teacher capacity building practices, teacher learning activities and contextual conditions in which they occur. Implications for developing efficacious principal leadership in teacher capacity building are discussed.