The requirements of leadership in the current environment of health care reform necessitate a clear distinction between leadership and management, an alteration in traditional leadership roles, and an evaluation of the knowledge and skills needed to address the ethical issues that arise from such reform. Transformational leadership is well suited to the current climate in health care because of the manner in which it actively embraces and encourages innovation and change. The article explores the elements of transformational leadership, describes the need for transformational leaders to be cognizant of the ethical aspects of their roles, and outlines the responsibilities of transformational leaders as moral agents.