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Teacher collaboration and collective teacher efficacy are crucial for various school, teacher, and classroom outcomes, yet their determinants are not well understood. Based on social capital theory, we propose that principals enhance collective efficacy by promoting collaboration. Using longitudinal data from 1,112 teachers in 29 schools over two and a half years, this study employs a random intercept cross-lagged panel model and finds evidence of a temporal association between principal leadership and collective efficacy, mediated by teacher collaboration. The findings further suggest a reciprocal relationship between collaboration and efficacy. This study highlights the importance of principal leadership in fostering social capital in their schools through teacher collaboration and efficacy.