This study examined teachers' perceptions of principals' authentic leadership and the relationship of authentic leadership to teachers' psychological capital in Taiwan. A total of 1,429 elementary and secondary school teachers were surveyed. The results showed that teachers perceived their principals' authentic leadership as moderate and that the principals' practice of authentic leadership was influenced by culture. Moreover, the principals' authentic leadership was found to be positively and significantly associated with teachers' psychological capital. This study provides empirical evidence to support a theoretical argument suggesting that authentic leadership fosters positive psychological capital among the members of an organization.