Enhancing teacher leadership is not only one of the approaches to improving teaching and learning, but it is also essential to the success of education reform. Based on leader-member exchange theory, 294 preschool teachers in China were surveyed, and a structural equation model was established to explore the relationship between the participating teachers' principal leadership style, teacher leadership and psychological capital. The findings revealed a significant positive correlation between transformational and transactional leadership styles and preschool teacher leadership. The laissez-faire leadership style had no correlation with preschool teacher leadership. The transformational leadership style and transactional leadership style were significantly and positively correlated with psychological capital, while the laissez-faire leadership style was significantly and negatively correlated with psychological capital. The transformational leadership style can positively influence preschool teacher leadership directly and indirectly through psychological capital; and the transactional leadership style can only positively influence preschool teacher leadership indirectly through the mediating role of psychological capital. Preschool teachers' leadership can neither be directly influenced by a laissez-faire leadership style nor be indirectly influenced through the mediating role of psychological capital.