The main aim of this study is to examine the effect of principals' transformational leadership on teachers' self-efficacy across 77 different Greek elementary and secondary schools based on a centralized education system. For the investigation of the above effect multilevel Structural Equation Modelling analysis was conducted, recognizing the nested nature of the data (teachers withing schools). It was using the approach of Muthén and the software package MPlus. For the purpose of this study, psychometric properties of the Principal Leadership Questionnaire (PLQ) and The Teachers' Sense of Efficacy Scale (TSES) were examined using structural equation modelling techniques. The results revealed that general factor representing the items of PLQ have an effect upon TSES constructs (efficacy in student engagement, and efficacy in instructional strategies). The originality and value of the current manuscript highlights the stability of the effect of transformational leadership and self-efficacy in a centralized educational system and the importance of the application of different transformational leadership behaviours concerning the enhancement of teacher's self-efficacy. Conclusions on the implications, suggestions for future research and limitations of the findings are drawn.