This study has two purposes: to develop a theoretical account of how teachers'perceptions of transformational school leadership are formed and to provide an initial, empirical test of the theory. The theory, developed from cognitive science views of human thought and perception, explains the formation of teachers' leader perceptions as a function of both alterable conditions found in the school context and unalterable characteristics of both leaders and followers. Survey evidence from a sample of 423 elementary and secondary schools about their principals suggests that alterable school conditions explain most of the variation in teachers' leader perceptions.