Effective leadership is a vital component of health care systems and has an extensive range of functions in improving organizational effectiveness and efficiency. This study aimed at exploring leadership challenges encountered by leaders in Iranian hospitals. This qualitative study was conducted on a purposeful sample of 27 members of hospital management team in Tehran using face-to-face semi-structured interviews and in-depth interviews. Thematic analysis was used to analyze and report the data. In this study, 5 main themes emerged upon the challenges of leadership in health care organizations as follow: organizational structure (complexity, centralization, and bureaucracy); human resources (the number and distribution of human resources, staff empowerment, and education, motivational mechanisms, and staff diversity); work nature (sensitivity, stress and tension, customer diversity, and team- oriented); leaders (knowledge and skills, appointment, superiors and colleagues, and time); and context (regulations and programs, cultural issues, social issues, and economic issues). The results of this study shed some light on the leadership challenges in a culturally specific developing country. The results also proved the importance of using educated leaders who are capable of understanding, analyzing, and dealing with such complex challenges.