Teacher leadership lies at the heart of school improvement. Leadership development among beginning teachers, however, is often neglected. This paper examines the role of principal-teacher interactions in the leadership development of a group of beginning teachers. Using a case study design, interviews were conducted and documentary evidence was collected. The results showed that the beginning teachers were able to take up leadership roles in schools both formally and informally. Development of teacher leadership requires constructive and regular communication with teachers and encouragement of their continuing professional development. Three types of effects on principal-teacher interactions in developing teacher leadership were identified: 'inspirational', 'empowering' and 'allowing'. These interaction patterns contribute to the international knowledge on teacher leadership development in schools. Implications for school leadership are discussed.