This study applies social exchange and person-environment fit theories to predict that despotic leaders tend to hinder employee job performance, job satisfaction, and psychological well-being, whereas employees' own Islamic work ethic (IWE) enhances these outcomes. Also, IWE moderates the relationship of despotic leadership with the three outcomes, such that it heightens the negative impacts, because employees with a strong IWE find despotic leadership particularly troubling. A multi-source, two-wave, time-lagged study design, with a sample (303 paired responses) of employees working in various organisations, largely supports these predictions. Despotic leadership and IWE relate significantly to job performance, job satisfaction and psychological well-being in the predicted directions, except that there is no significant relationship between IWE and job satisfaction. A test of moderation shows that the negative relationships of despotic leadership with job outcomes are stronger when IWE is high. These findings have pertinent implications for theory, as well as for organisational practice.