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This study employed a multilevel modeling approach to examine the impact of principal instructional leadership on teacher efficacy and the mediating role played by faculty trust in that process. A total of 50 secondary school principals and 714 teachers of Western China participated in the study. The results indicate that instructional leadership, in terms of developing a positive learning climate, is positively related to teacher efficacy. Instructional leadership in all three aspects is positively related to faculty trust. The results underscore the fact that leadership has a more indirect than direct impact on teacher efficacy in that faculty trust in the principal served as a partial mediator. Also, contextual variables have considerable influence on teacher sense of efficacy.