This paper will present why and what transformational leadership is needed to pursue school effectiveness and development in the rapidly changing education environment and in the coming new century. First, the challenges to school leadership and the need for new leadership will be discussed in the light of the pursuit of multiple school effectiveness and the worldwide educational reform trends. Based on the recent research on principals' leadership in Hong Kong schools, some important insights will be drawn for leadership development and school development particularly in both local context and international contexts. Then the paper will illustrate the shifts of leadership concepts and explain why transformational leadership is do critical to meeting educational challenges in the changing environment. The conception of transformational leadership and its relationship to school-based management, strategic management, and school effectiveness will be illustrated and explained. Finally, a number of implications will be proposed for school principals to practice transformational leadership and achieve long-term and multiple school effectiveness. Establishing a principal centre for leadership learning and development will be a major direction.