Studies on the effects of transformational leadership on employee innovative behaviour have yielded mixed results. The authors argue that one possible explanation for these mixed findings is that researchers have assumed a linear relationship between these constructs. In contrast, they suggest that the relationship between transformational leadership and innovative behaviour is non‐linear. Specifically, the authors argue that the positive effects of transformational leadership on innovative behaviour will be stronger at low and high levels of transformational leadership. Moreover, they examine whether the relationship between transformational leadership and innovative behaviour is mediated by knowledge sharing within and between teams. The authors undertake a constructive replication by testing these hypothesized relationships in two studies: (1) a multi‐actor team‐level study conducted in the USA, and (2) a longitudinal employee‐level study of teachers in the Netherlands. Results of both studies reveal that knowledge sharing mediates the relationship between transformational leadership and innovative behaviour, and that the indirect relationship is curvilinear. The authors link these findings to leader substitution theory, proposing that employees turn to their peers and other parties when there is an absence of effective leadership.