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Leadership research has traditionally explored the consequences of leadership behaviors while giving far less attention to understanding why leaders behave the way they do toward subordinates. Moreover, the few theoretical frameworks and studies that do address antecedents of leadership behavior have focused almost entirely on personality and other individual differences while largely overlooking situational determinants, particularly proximal situational determinants that would help explain why a variety of leadership behaviors exist at varying levels in the same organization. To fill these gaps in theory and research, this dissertation proposes that leaders' job demands may serve as a proximal situational determinant of "constructive" and "destructive" forms of leadership. Specifically, by integrating transactional stress theory and the challenging job assignments model, I introduce the construct of leadership challenge demands and propose a theoretical model that depicts the process whereby leadership challenge demands come to influence three types of leadership behavior: transformational leadership, abusive supervision, and passive leadership. In essence, the model depicts two competing reactions that leaders may have to leadership challenge demands. On one hand, leaders high on leadership self-efficacy are proposed to react favorably to leadership challenge demands through feelings of engagement and therefor exhibit transformational leadership. On the other hand, leaders low in leadership self-efficacy are proposed to react negatively to leadership challenge demands through feelings of burnout and therefore exhibit passive leadership or abusive supervision. The hypothesized model was tested in a sample of 153 managers and 631 direct reports at a Fortune 500 company. Results showed that while leadership challenge demands are related to higher engagement and thereby related to transformational leadership, leaders low in LSE react to leadership challenge demands with high burnout and consequently engage in passive leadership. Hypotheses regarding abusive supervision were not supported. All these results held after controlling for relevant dispositional, demographic, and experience-oriented factors. This study thus contributes to theory and research on leadership behavior, leadership development, and work stress by linking leadership challenge demands to leadership behaviors, illustrating the dual nature of developmental leadership challenges, identifying self-efficacy as a moderator of challenge demands, and exploring motivation and stress in the leadership role. It further suggests that organizations should be cautious about giving "stretch" assignments to leaders before they feel confident in their leadership ability.