The purpose of the current study was to test engaging leadership, which is a recently developed leadership concept based on basic psychological needs theory. Drawing on self‐determination theory, the current study hypothesized that basic psychological needs mediate the relationship between engaging leadership and both positive and negative outcomes. An association between need satisfaction and positive results and an association between need frustration and adverse outcomes were expected. The survey data, collected from three comparable groups from two multinational, technical engineering organizations (N = 304), were analyzed using partial least squares structural equation modeling. Autonomy satisfaction was found to play a pivotal role in the leadership model and was associated with increased positive outcomes, such as work engagement and autonomous motivation, and decreased unfavorable motivational consequences, such as controlled motivation and amotivation. The highlighted role of autonomy satisfaction informs leaders to focus on the positive aspects of leadership and need fulfillment rather than aiming to diminish frustration. Additionally, the current study adds to the growing body of knowledge on effective leadership approaches in a fast‐changing complex business world and on the benefits of autonomy‐supportive work environments.