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Our education system has been remoulding rapidly because of modernization. Transformational leadership style leads to favourable changes in those who follow. These leaders put in maximum efforts to increase the level of follower’s awareness for valued outcomes by expanding and elevating their needs and encouraging them to transcend their self-interests. Transformational leadership plays pivotal role in promoting and managing school development by influencing the self-efficacy of teachers. Self-efficacy is one of the four major components of positive psychological capital .School is the first and foremost important platform of education. The present paper makes an attempt to study the relationship between transformational leadership style of principal and self-efficacy of school teachers. For this, a total sample of 120 (n=20 school principals having minimum 7-8yrs. experience and n= 100 school teachers having minimum 5yrs.experience of senior classes) were taken. The ratio was 1:5 (1 principal and 5 teacher from the same school). The scores of 1 principal were assigned to 5 teachers. Teacher self-efficacy scale by Schwarzer, Schmitz and Daytner and Multifactor Leadership Questionnaire by Bass and Avolio were used to measure the above variables. The data were analysed with the help of Correlation and Regression technique. Obtained findings revealed the positive correlation of idealized influence, individualized consideration, contingent reward, management-by-exception and laissez-faire leadership with self-efficacy.