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This study was conducted to identify the effects of transformational leadership and transactional leadership on work engagement in a sample of 156 employees from major company. The present study also attempted to find out the mediating effect of psychological capital on the relationship and to investigate transformational leadership's augmentation effect on psychological capital and work engagement. The results showed that both transformational leadership and transactional leadership elevated levels of work engagement and these effects were found to be partially mediated by psychological capital. This implies that it is crucial that the role of leader who motivates employees to perceive high level of their psychological resources to create above the average performance or beyond performance expectation. Also difference test for mediating effect of psychological capital, which is a research question in this study, revealed that psychological capital had been relatively strong mediating effect on the relationship between transformational leadership and work engagement. This indicates that transformational leadership's augmentation effect on job satisfaction, organizational commitment, job performance in previous research was also found in psychological capital and work engagement. Finally, Implications and limitations of these results are discussed.
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